Licensed ADI
This refers to the operations of the reporting ADI on a stand-alone basis.
Securitisation deconsolidation principle
Except as otherwise specified in these instructions, the following applies:
- Where an ADI (or a member of its Level 2 consolidated group) participates in a securitisation that meets APRA’s operational requirements for regulatory capital relief under Prudential Standard APS 120 Securitisation (APS 120):
(a) special purpose vehicles (SPVs) holding securitised assets may be treated as non-consolidated independent third parties for regulatory reporting purposes, irrespective of whether the SPVs (or their assets) are consolidated for accounting purposes;
(b) the assets, liabilities, revenues and expenses of the relevant SPVs may be excluded from the ADI’s reported amounts in APRA’s regulatory reporting returns; and
(c) the underlying exposures (i.e. the pool) under such a securitisation may be excluded from the calculation of the ADI’s regulatory capital (refer to APS 120). However, the ADI must still hold regulatory capital for the securitisation exposures[3] that it retains or acquires and such exposures are to be reported in Reporting Form ARF 120.1 Securitisation – Regulatory Capital. The risk-weighted assets (RWA) relating to such securitisation exposures must also be reported in Reporting Form ARF 110.0.1 Capital Adequacy (Level 1) and Reporting Form ARF 110.0.2 Capital Adequacy (Level 2).
- Where an ADI (or a member of its Level 2 consolidated group) participates in a securitisation that does not meet APRA’s operational requirements for regulatory capital relief under APS 120, or the ADI undertakes a funding-only securitisation or synthetic securitisation, such exposures are to be reported as on-balance sheet assets in APRA’s regulatory reporting returns. In addition, these exposures must also be reported as a part of the ADI’s total securitised assets within Reporting Form ARF 120.2 Securitisation – Supplementary Items.
Reporting period
The information provided in this form should be for the calendar month up to and including the last day of the reporting month. All ADIs should submit the completed form to APRA within 10 business days after the end of the relevant reporting month.
Unit of measurement
Amounts denominated in foreign currency are to be converted to AUD in accordance with AASB 121 The Effects of Changes in Foreign Exchange Rates (AASB 121).
The general requirements of AASB 121 for translation are:
- foreign currency monetary items outstanding at the reporting date must be translated at the spot rate at the reporting date;[4]
- foreign currency non-monetary items that are measured at historical cost in a foreign currency must be translated using the exchange rate at the date of the transaction;[5]
- foreign currency non-monetary items that are measured at fair value will be translated at the exchange rate at the date when fair value was determined.
Transactions arising under foreign currency derivative contracts at the reporting date must be prepared in accordance with AASB 139 Financial Instruments: Recognition and Measurement (AASB 139). However, those foreign currency derivatives that are not within the scope of AASB 139 (e.g. some foreign currency derivatives that are embedded in other contracts) remain within the scope of AASB 121.
For APRA purposes equity items must be translated using the foreign currency exchange rate at the date of investment or acquisition. Post-acquisition changes in equity are required to be translated on the date of the movement.
As foreign currency derivatives are measured at fair value, the currency derivative contracts are translated at the spot rate at the reporting date.
Exchange differences should be recognised in profit and loss in the period which they arise. For foreign currency derivatives, the exchange differences would be recognised immediately in profit and loss if the hedging instrument is a fair value hedge. For derivatives used in a cash flow hedge, the exchange differences should be recognised directly in equity.
The ineffective portion of the exchange differences in all hedges would be recognised in profit and loss; and
- translation of financial reports of foreign operations.
A foreign operation is defined in AASB 121 as meaning an entity that is a subsidiary, associate, joint venture or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity.
Exchange differences relating to foreign currency monetary items that form part of the net investment of an entity in a foreign operation, must be recognised as a separate component of equity.
Translation of financial reports should otherwise follow the requirements in AASB 121.
Basis of preparation
Unless otherwise specifically stated, information reported on this form should comply with Australian accounting standards.
Definitions
A separate form for commercial finance in all eight states should be completed. Where the entity has no activity in any state, check the “nil form” box. The form requests details of new commitments to provide commercial finance to private and public enterprises and individuals. Only the Australian activities of the business should be included on the form. If exact figures are not available please provide careful estimates. Please note that the items listed under ‘Including’ and ‘Excluding’ are examples and should not be taken as a complete list of items to be included or excluded.
What is a “commitment”?
A commitment is a firm offer to provide finance which has been accepted by the client. A commitment generally exists once the loan application has been approved, and a loan contract or letter of offer has been issued to the borrower.
Include:
- commitments to related corporations except to those related corporations within the same Financial Sector (Collection of Data) Act 2001 category or Australian and New Zealand Standard Industrial Classification (ANZSIC) class[6];
- commitments for hire purchase agreements for commercial finance;
- commitments for debt participation in leveraged lease agreements;
- commitments that involve or make provision for the issue of bills of exchange to be accepted, discounted or drawn by you;
- new commitments which have also been cancelled during the month;
- commitments for standby agreements; and
- commitments for revolving credit loans to individuals secured by mortgage (mortgage backed overdrafts) on residential properties where the stated purpose at application is as a commercial line of credit.
Exclude:
- commitments to non-residents;
- commitments for lease agreements (other than hire purchase agreements and debt participation in leveraged lease agreements), these should be reported on ARF 393.0 Lease Finance;
- deposits with financial institutions;
- the purchase of securities unless it involves a direct commitment to a client;
- bills of exchange and promissory notes purchased and held;
- commitments contingent on some specified eventuality (e.g. bill endorsement, guarantees, letter of credit) unless and until that eventuality occurs;
- commitments for discounts which exists as options under acceptance commitments; and
- commitments for personal investment loans – these should be reported on ARF 394.0 Personal Finance.
What is a “dwelling”?
A dwelling is a place of residence which is:
- contained in a building which is an immobile structure;
- private (i.e. not generally accessible to the public); and
- self contained (i.e. includes bathing and cooking facilities).
How to consolidate
- For corporations registered under the Financial Sector (Collection of Data) Act 2001, report consolidated figures for all related corporations within the same Registered Financial Corporation category.
- For other corporations, report consolidated figures for all related corporations within the same ANZSIC industry.
Specific instructions
Part A: New commitments for fixed loans – By purpose
The purpose of the loan is that specified by the borrower. Multi-purpose loans should be split and each component reported in the appropriate purpose classification. Where this is not possible the whole loan should be classified to the major purpose.
Fixed loans generally involve a commitment for a fixed period for a specific purpose and repayments over that fixed period which reduce the loan, but do not make further finance available.
- Construction finance
a) Erection of dwellings for rental/resale
Include:
- only dwellings that will be occupied by persons other than the owner(s).
d) Erection of industrial buildings
Include:
- factories, automotive repair facilities etc.
e) Erection of other non-residential buildings
Include:
- hotels, buildings for educational, religious, health, entertainment and recreational purposes.
f) Erection of non-building structures
Include:
- roads, bridges, railways, harbours, telecommunication towers, dams, powerlines, pipelines, sewers.
g) Alteration and/or additions
Include:
- all structural and non-structural changes to existing buildings.
Exclude:
- maintenance and repairs (include in Question 7); and
- improvements which do not involve building work (include in Question 7).
- Finance for the purchase of land and buildings
Include such things as are considered by law to be part of land (e.g. fencing).
a) Purchase of dwellings for rental/resale
Include:
- only dwellings that will be occupied by persons other than the owner(s).
d) Purchase of industrial buildings
Include:
- factories, automotive repair facilities etc.
e) Purchase of non-residential buildings
Include:
- hotels, buildings for educational, religious, health, entertainment and recreational purposes.
f) Purchase of rural property
Include:
- all property used for agricultural or pastoral purposes.
g) Other land purchases
Include:
- land not elsewhere included.
- Wholesale finance
Wholesale finance is finance for the purchase of goods by wholesalers and retailers.
Include:
- traders' stocks held under bailment or floorplan schemes.
- Purchase of plant and equipment
a) Motor vehicles
Include:
- cars, station wagons, utilities, trucks, ambulances and passenger vehicles such as buses.
Exclude:
- motorcycles, trailers, caravans, trains, boats and planes (include in ‘Other transport equipment’ below).
b) Other transport equipment
Include:
- motorcycles, trailers, caravans, trains, boats and planes.
c) Other plant and equipment
Include:
- construction and earthmoving equipments;
- agricultural machinery; and
- EDP and office equipment.
- Refinancing
Include:
- commitments where the principal purpose is to pay out (refinance) existing commercial loans.
- Other
Include:
- maintenance and repairs, and other improvements to property not involving building work.
- Of the new commitments for fixed loans (Question 1 to 7), how much was debt participation in leveraged leases
The amount of debt participation in leveraged leases should be included in fixed loans (Question 1 to 7).
Part B: New commitments for revolving credit loans
Revolving credit facilities involve a commitment for a credit or borrowing limit and where the extent of the borrowings used at any one time may be for any amount up to the authorised limit. Repayments (other than of charges and interest) reduce the borrowings thereby increasing the amount of unused credit available. For example, overdrafts limits (mortgage backed overdrafts).
Cancellations of, and reductions in previously approved credit limits
Include:
- the actual value of credit limits cancelled and the value by which existing credit limits were reduced during the month.
Exclude:
- amounts used as balancing or adjustment items (such as adjustments between states). These should be reported in Question 15; and
- repayments which reduce the used portion of the credit facility but not the total credit available. These should be excluded from the form altogether.
- Balancing item (+/-)
If the previous month's 'total credit limits available' (Q12 last month) plus (+) 'total new limits approved' (Q11) minus (-) 'cancellations' (Q14) does not equal the current month's 'total credit limits available' (Q12), please provide the amount and a reason for this discrepancy.
Part C: New commitments – By industry
Industry is the business the client is mainly engaged in. The industry groupings are according to the ANZSIC. Include businesses that provide related or supporting services.
- Agriculture, forestry and fishing
Include:
- borrowers engaged in providing related services such as sheep shearing, aerial agricultural services, harvesting or forest protection.
- Mining
Include:
- borrowers engaged in mineral exploration, in the provision of services to mining or mineral exploration, and mining enterprises under development.
- Manufacturing
Include:
- borrowers engaged in manufacturing products, where 'manufacturing is related to the physical or chemical transformation of materials or components into new products'.
- Construction
Include:
- borrowers engaged in special trade construction such as plumbing, earthmoving and dredging, painting etc.
- Wholesale trade
Include:
- borrowers engaged in the resale of new or used goods to businesses or to institutional (including Government) users.
- Retail trade
Include:
- borrowers engaged in the resale of goods to final consumers for personal or household consumption; and
- borrowers engaged in the reselling their own goods by auction.
- Transport and storage
Include:
- borrowers engaged in providing terminal and storage facilities; services related to transport; booking, travel, forwarding, materials handling etc.
- Finance and insurance
Include:
- borrowers engaged in the provision of finance, investments in financial assets and in providing services to lenders, borrowers and investors; and
- borrowers engaged in the provision of insurance and superannuation, and in providing services to insurers.
- Property and business services
Include:
- borrowers engaged in valuing, purchasing, selling, renting, leasing or managing real estate;
- borrowers engaged in developing or subdividing land;
- borrowers engaged in scientific research and meteorological services;
- borrowers engaged in providing technical, legal, accounting and other business services; and
- borrowers engaged in renting and hiring equipment (except cars, trucks, and other transport equipment).
- Cultural, recreational, personal and other services
Include:
- borrowers engaged in providing entertainment, recreational, library, museum, accommodation, and catering services;
- borrowers engaged in personal services such as laundries, hairdressing, photography, funerals;
- private households employing staff; and
- borrowers engaged in the provision of public order and safety services (such as police, prison and fire-brigade).
- Government administration and defense
Include:
- borrowers engaged in Federal, State and Local government enterprises engaged in public administration and regulatory activities;
- judicial authorities and commissions; and
- Army, Navy and Air Force establishments.
- Health and community services
Include:
- borrowers engaged in providing health, welfare and employment services; and
- certain non-profit organisations such as religious organisations, business, professional and labour organisations, and political parties and associations formed to promote community or sectional aims.
- Other industries
Include:
- borrowers not elsewhere classified, such as those involved in the production or distribution of gas or electricity, the storage or supply of water, and the provision of education and communication services.
- Total
The total equals the sum of questions 16 to 28. The total of fixed loans in Question 30 should equal the total of fixed loans in Question 8. The total of revolving credit in Question 30 should equal the total of new revolving credit in Question 11.
Part D: Comments
- Please provide comments
- on any of the information you have supplied on this form;
- on any questions which caused problems; and
- if you would like to suggest improvements to this form.