BANK OF NEW ZEALAND.

Auckland Star, Volume LVII, Issue 143, 18 June 1926, Page 10

BANK OF NEW ZEALAND.

ANNUAL MEETING.

HIGHER DIVIDEND FORECASTED,

(By Telegraph.—Special to "Star.")

WELLINGTON, this day.

In the course of his annual address to shareholders of the Bank of New Zealand at Wellington to-day, the chairman of directors, Sir George Elliot, commented on various items in the balancesheet, which has already been summarised in these columns.

In dealing with the capital account, Sir George mentioned that of the new shares issued last year, 1233 were submitted for sale by tender and realised an average premium of £1 17/0 per share. The amount thus collected, £2310 10/, was added to the reserve fund.

The reserve fund, which now totals £2.577,310, is invested in British Government securities. The increase in profits amounting to £92,875 as compared with the previous year was chiefly due to the employment of the f 1,125,000 of new capital and to the surplus over the book value of in%-estments which matured during the year. Under the heading of dividend, the report states: — "Next year, without making any definite promise, the directors hope to be in a position to pay a bonus of 1 per cent on the preference B and ordinary shares. This statement is being made now so that all shareholders may have early information of a probability that may eventuate a year hence. "The" profit-earning power of the bank has been augmented by substantial additions to the reserve fund which have been made during the last few years. The directors desire, however, to warn shareholders against taking an exaggerated view of this earning power. It is by no means certain that the institution will do as well proportionately in the future as it has done during recent years, and in the distributions of profits the board will most certainly not be influenced by the market value of the shares. ' Further, it 19 unlikely that such large annual additions from ordinary profits to tbe reserve fund will continue to he possible."

Referring to the increase in advances and bills discounted, the report states: "Owing to the shrinkage in the Dominion's exports and increase in imports, customers have found it necessary to lean on the bank to a greater extent than during the previous year. Indications pohit to the probability of our still being called upon for extra assistance until next season's produce returns become available. Owing to the strong financial position of the bank, our resources are ample to meet all demands likely to be made upon us."

The increase of £46,343 in "Landed property, premises, etc." is due to purchases of landed property, erection of new premises and extensions to old premises. Since 1922 the book value of landed property and premises has not been written down as they already stand on the hooks at considerably below actual value.

In reference to the balance of trade as between the Dominion, the rest of the Empire, and foreign countries, Sir George ' suggested that it might be possible to j make adjustments in our Customs tariff which would tend to bring our exports and imports to and from various countries more on an equality. The general banking position of the Dominion was referred to as follows:— "The figures of the quarterly returns of the banks for the period ended March 31 last compare unfavourably with those of the similar period of 1925. Deposits: 1025 £53,090,843 1926 .' £51,314,674 Decrease £1,776,160 Advances: 1025 £43,730,262 1926 ..'. £48.285,142 Increase £4,534,850 the result being a shrinking in banking resources in the Dominion of £6,331,049 This position is due primarily to the adverse external trade conditions already mentioned, and, in a lesser degree, to the raising of loans locally by the Government 'and local bodies." The motion for the adoption of the report and balance-sheet was seconded by Mr. William Watson, who stated that Mr. Gibbs and himself had gone carefully into the question, explained by the chairman, of making a special issue of shares and debentures to enable the bank to undertake the* business of longdated loans, on the amortisation principle, and they were of opinion that such a new departure, carefully conducted, would be in the distinct interest of the shareholders of the bank and of the people of the Dominion generally.