Windfall For Finance Companies
The Age
Friday May 28, 1999
Banks, insurance and other finance companies accounted for almost a third of all the profits made by Australian business in 1997-98, the Bureau of Statistics has reported.
The bureau estimated yesterday that the combined profits of the finance and insurance sector jumped 11 per cent in the last financial year to reach $32.8 billion - almost two-and-a-half times the $13.7billion aggregate profit of the much larger manufacturing sector.
Finance and insurance companies averaged a profit margin of 27.8 per cent, the bureau said. In the rest of Australian business, the average was roughly 6.9 per cent.
All other industry sectors between them amounted profits of just $73.8 billion. The huge wholesale and retail trade sectors had combined profits of just $12 billion, or just over 3 per cent of their income, while manufacturing firms averaged profits of just 6 per cent. These three sectors between them accounted for half the income and expenditure of Australian business.
As a return on assets, the finance sector recorded a return of just 3per cent, against an industry average of 4.7 per cent. But the nature of banking - holding others' assets in trust - makes this a meaningless comparison. At June 1997 the finance sector held more assets than all other businesses combined.
The bureau said 834,000 businesses were operating in Australia in 1997-98, employing 6.9 million people. Their income was $1.2 trillion.
© 1999 The Age