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Note 17: Advances (continued)

Note 17: Advances (continued)
Forecast
30 June 2012 		Actual
Budget 11
$m 		Budget 12
$m 		30 June
2012
$m 		30 June
2011
$m

Kiwibank Mortgages

 

By maturity

 
1,263 1,137 Expected to be repaid within one year 1,036 1,028
12,230 11,500 Expected to be outstanding for more than one year 11,409 10,467
13,493 12,637 Total Kiwibank mortgages 12,445 11,495

Impairment of Kiwibank Mortgages

 
Opening balance 87 20
Impairment losses recognised on mortgages 45 56
Amounts written off as uncollectible (31) 12
Impairment losses reversed (10) (1)
Closing balance 91 87
Collective impairment allowance 50 37
Individual impairment allowance 41 50
Impairment of Kiwibank Mortgages 91 87

Ageing of Kiwibank Mortgages Past Due But Not Impaired

 
Less than six months 202 185
Between six months and one year -  - 
Greater than one year    -  - 
Total Kiwibank mortgages past due but not impaired 202 185

Kiwibank mortgages are primarily measured at amortised cost. This amortisation is based on a discounted cash flow model with reference to market interest rates, prepayment rates and estimated credit losses. The fair value of Kiwibank mortgages is $12,497 million (2011: $11,555 million).

The maximum loss due to default on Kiwibank mortgages is the carrying value reported in the statement of financial position. Collateral is obtained to mitigate any risk of loss, which in the case of Kiwibank mortgages are primarily in the form of properties. The fair value of the collateral provided is sufficient to ensure that the Crown will recover the entire amount owing over the life of the mortgage and there is reasonable assurance that collection efforts will result in payment of the amounts due in a timely manner.

Note 17: Advances (continued)
Forecast
30 June 2012 		Actual
Budget 11
$m 		Budget 12
$m 		30 June
2012
$m 		30 June
2011
$m

Other Advances

 

By maturity

 
61 473 Expected to be repaid within one year 480 763
1,057 743 Expected to be outstanding for more than one year 550 849
1,118 1,216 Total other advances 1,030 1,612

Impairment of Other Advances

 
Opening balance 190 84
Impairment losses recognised during the year 39 141
Amounts written off as uncollectible (80) (33)
Impairment losses reversed (1) (2)
Closing balance 148 190
Collective impairment allowance 140 134
Individual impairment allowance 8 56
Impairment of Other Advances 148 190

Ageing of Other Advances Past Due But Not Impaired

 
Less than six months 7 - 
Between six months and one year -  - 
Greater than one year -  - 
Total other advances past due but not impaired 7    - 

Measurement Basis for Other Advances

 
956 950 Other advances measured at amortised cost 790 1,367
162 266 Other advances measured at fair value 240 245
1,118 1,216 Total other advances 1,030 1,612

The NZS Fund, Public Trust and a number of SOEs manage the majority of these advances.

Other advances measured at fair value are those that are managed and performance is evaluated on a fair value basis. As they are designated at fair value through profit and loss, the value of these instruments will be affected by changes in interest rates. Changes to interest rates may arise from features specific to these assets (ie, changes to credit risk on these assets) and broader market sentiment changes.

Their carrying amount provides a reasonable approximation of their fair value.

In addition to these other advances, the Government has entered into commitments to provide advances through two facilities. The Crown has agreed to make available to the Auckland Council, a loan facility to enable the Council to develop the Auckland metro rail network. The loan facility amount is $500 million of which $440 million is undrawn as at 30 June 2012. The Crown has also agreed to make available to the New Zealand Local Government Funding Agency (NZLGFA) a New Zealand dollar revolving credit facility for 10 years (to February 2022). This facility is only to be utilised to meet exceptional and temporary liquidity shortfalls affecting the NZLGFA. The facility is for $500 million with the possibility for this to be increased to $1 billion by February 2015. As at 30 June 2012 the facility has not been utilised.

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