Note 9: Advances
| Forecast | Actual | |||
|---|---|---|---|---|
| Original Budget $m | Estimated Actual $m | 30 June 2006 $m | 30 June 2005 $m | |
| Original Budget $m | Estimated Actual $m | 30 June 2006 $m | 30 June 2005 $m | |
| Forecast | Actual | |||
| 7,195 | 5,472 | Student loans (see analysis below) | 5,569 | 6,465 |
| 2,615 | 2,871 | Kiwibank mortgages | 2,609 | 1,575 |
| 88 | 79 | Residential care loans | 71 | 77 |
| 48 | 57 | Mäori development rural lending | 80 | 51 |
| 24 | 24 | Forestry encouragement loans | 24 | 25 |
| 6 | 6 | Catchment authorities | 5 | 6 |
| 477 | 421 | Other | 400 | 337 |
| 10,453 | 8,930 | Total Advances | 8,758 | 8,536 |
| Analysis of Student Loans | ||||
| Outstanding balance | ||||
| 8,178 | 8,189 | Total loans outstanding (including interest) | 8,370 | 7,499 |
| (983) | (2,717) | Total provisions (capital and interest) | (2,801) | (1,034) |
| 7,195 | 5,472 | Total Student Loans | 5,569 | 6,465 |
| Movement during the year | ||||
| 6,465 | Opening balance | 6,465 | ||
| (1,479) | Initial fair value write down | (1,415) | ||
| (18) | Other impairment | (13) | ||
| 1,042 | Amount borrowed in current year | 1,046 | ||
| (299) | Fair value write down on new borrowings | (328) | ||
| (574) | Repayments made during the year | (550) | ||
| 335 | Interest unwind | 358 | ||
| - | Other movements | 6 | ||
| 5,472 | Closing balance | 5,569 | ||
| Movement during the year | ||||
| 6,594 | Opening balance | 5,995 | ||
| 1,040 | Amount advanced in current year | 971 | ||
| 547 | Interest accrued on outstanding loan balances | 498 | ||
| (402) | Repayment of base capital | (313) | ||
| (253) | Repayment of accrued interest | (259) | ||
| (339) | Interest written off and movement in provision for interest write-offs and doubtful debts | (435) | ||
| 8 | Other movements | 8 | ||
| 7,195 | Closing Balance | 6,465 | ||
Student Loans Book Value
Student loans are recognised initially at fair value plus transaction costs and subsequently measured at amortised cost using the effective interest rate method, less any impairment loss.
Fair value is the amount for which the loans could be exchanged between knowledgeable, willing parties in an arms length transaction. Fair value on initial recognition of student loans, is determined by projecting forward the repayments required under the scheme, to a willing buyer and discounting them back at an appropriate discount rate.
As student loans are subsequently measured at amortised cost, the model projects all future cash flows to the Crown associated with the loan and the effective interest rate is calculated at initial recognition. This rate is used to spread the Crown’s interest income across the life of the loan and determines the loan’s book value at each reporting date. If the timing of future receipts is revised, the book amount at reporting date is adjusted to reflect the revised estimated cash flows at the loans’ original effective interest rate. The adjustment is recognised as income or expense in the Statement of Financial Performance.
