BANK OF NEW ZEALAND.

Auckland Star, Volume LVI, Issue 293, 11 December 1925, Page 11

BANK OF NEW ZEALAND.

I HALF-YEARLY MEETING. c — |j CHAIRMAN'S ADDRESS. |T BANK CRITICS ANSWERED, r (By Telegraph.—Special to "Star.") WELLINGTON, this day. The half-yearly general meeting of tha Jsank of New Zealand was held this morning. Sir George Elliot (chairman of •directors) presiding. The chairman said that although there were no accounts to be laid before the meeting, it was pleasant to be able to etate that the operations of the bank for the half-year which ended on September 30 last were of a satisfactory Character. The profits earned during ■that period warranted the payment of an interim dividend on the ordinary shares at the same rate as that of a year ago. viz.. 1/4 per share on the capita] that had been paid up at April ] ]ast. and of 2d per share on the small iiuraber of the new shares—l,233 — ivhich, not having been taken up at that date, had been allotted on September 7.

Election Criticism. "Durln" , the recent Parliamentary election campaign," said Sir George Eliot, "the iniquities, so called, of the Bank of New Zealand had been a favourite subject of certain Parliamentary candidates. Indeed, 1 do not think any institution in the country lias been the subject of more abuse and misrepresentation. Your directors have not thought it necessary to enter into the arena of disputation in the attempt to controvert the reckless statements which have been made, but I think that as certain of them are still fresh in your memories, I ehall be excused if I make reference to one or two of them now.

"One gross exaggeration that Las .ip.peureti has been a calculation of thi? manner in which nioisey invested in the shares of this bank a good many years ago has increased in value. A certain speaker gravely informed an audience that it had been estimated that, in addition to dividends, one original shave in the Bank of Xew Zealand was now Worth. £1632. There were 50,000 original eharss in the bank, and, at the figure mentioned, their value would now be (£81,600,000. I suppose the other shares, created since the first issue, have also some value, so that if the estimate mrived at were true, shareholders might well be congratulated upon the magni itude of their possessions—but it is not (true. The ordinary capital to-day is £3,750,000, for the possession of which ehareholders have actually paid £5,513.----473, which amount has been dealt with ps follows: — .

. Written off in past years.. £2,263,473 , Added to reserve fund UoU.OOO i £2,5X3,473 1 Transferred to capital from I " reserve fund 750,000 ', £1,703,473 I Present ordinary capital .. 3,750,000 Ist ■ £5,013,473 f The Bank's Taxation. "Another ingenious candidate for Parliamentary honours proved, to his own satisfaction at least, that if the Stats took over the Bank of Jsew Zealand, the profits it had Earned for the year ended March last could have, been used to increase the wages of 50,000 workers by a certain amount weekly. I do not sup\ pose for one moment that this candidate intended the State to take forcible possession of all the assets of the institution without paying for them. If lie intended, rather, that the State should •buy and pay a fair market price for the bank, then practically tne total naiance eheet profits for the year would have fceen required to pay interest on the sum the Government must necessarily borrow in order to make the suggested purchase.

"The amount paid by the bank in taxation has also been a favourite topic of some of our critics, who have pointed out that the amount Jias been consider»bly reduced during the last three or lour years. This has certainly been the case, as anybody njay see by comparing the figures shown in the published reports ef those years. The reduction, however, that has taken place is the result of readjustments in the scale of taxation that have affected not only this bank, but all large payers of income tax. These large payers had during the war time to hear a disproportionately large share of the increased burdens which were then placed upon the community, and it was understood that, when readjustments .were made, some parfi of this disproportion would be rectified.

Five Thousand Shareholders. "Even so, the taxation paid by banks sb, in proportion, far larger than that paid by any other income tax payer. It has been explained more than once from this chair that the so-called income 'tax that is collected from banks is not' an income tax at all. .It is a levy upon their assets and liabilities in lieu of. income tax, and it is based upon the assumption that a bank makes 30/ per cent net profit upon its total assets and liabilities. As a matter of fact, the actual profits doj not amount to anything like that figure. "The suggestion appears to be that, because the bank is a large concern, it cut to be paying into the coffers of the State in the shape of taxation an evan larger proportion of its earnings than it does at present. I would remind you. however, that though the bank is undoubtedly a large business, it is not ov/ned by one or two individuals only. There are to-day more than 5300 shareholders in the bank; more than twothirds of this number own less than £500 of the capital each. The ownership of the bank is, therefore, widely distributed among the people of New Zealand.

The Chairman's Position. "Without referring to any other quotations from electioneering speeches, may I say this: I am a Government nominee on the board of this bank, and by law I do not require to hold any shares to qualify ine for the position. I have not now, nor have I ever had, any share interest in the Bank of New Zealand directly or indirectly. I, there, fore, cannot be accused of being biased iy self interest in my judgment. I have been on the board for about six years, and I can testify that the business is carried on in what the directors consider to he the best interests of the Dominion, as well as of the shareholders. Eecognising how intimately this baok is eoneerni'd with everything that makes for the welfare of the country, advances ihave on many occasions.been made which, from a strict point of view, might be regarded as outside the sphere of ordinary banking, for while profits are 'if importance, the making of profits ha.3 Pot blinded the directors to the' lasting importance of assisting primary producers and business housos to the utmost limit. In my opinion every 2\e\v Zealander should be proud of this institutkmJ ,