THE COUNTRY'S TRADE.

Auckland Star, Volume LIX, Issue 161, 10 July 1928, Page 5

THE COUNTRY'S TRADE.

BANKING RETURNS. HEAVY DEPOSITS IN JUNE. ENCOURAGING FIGURES. (By Telegraph—Own Correspondent.) WELLINGTON, this day. The present banking returns for the June quarter are most interesting, as showing a full recovery from the recent period of depression and shortage of available funds or credit. The announcement was made on Saturday that the banks had decided to reduce interest rates by one-half per cent, reverting to the rates ruling prior to May of last year, and the returns now available show that the position fully warrants this move; in fact, it could hardly have been further delayed. Briefly, the position is that the banks now have an excess of deposits over advances of £7,520,178, as compared with an excess of advances a year ago of £4,262,740. This is an improvement of £11,782,918, which almost exactly coincides with the improvement in the balance of trade, which for the year ended May 31 last shows an improvement of £11,988,457. It shows how closely our trade and banking are related. The trade outlook is good, and, consequently, we should not have further financial troubles for some time to come. i Following is a brief review of the main features of the latest returns compared with those of three months ago:— June Qr. Mar. Qr. 1928 1928 £ £ Note circulation .... 6,430,109 6,376,668 Deposits (free) 25,357,145 24,482,151 Deposits (fixed) 27,589,988 25,476,144 Deposits (Govt.) .... 1,956,075 2,378,5(7 Coin and bullion ... 7,567,494 7,867,459 Discounts 1,117,454 1,504,895 Advances 44,249,501 44,565,475 In addition, discounts at £1,177,454 show a reduction of £330,654, so that | the borrowings by the public from the I banks have shrunk by £5,326,151, as compared with last year, but the total is still heavier than in 1925 and earlier. No doubt the higher rate of interest ruling during the past year has assisted to hasten the reduction of overdrafts, but these will probably be kept down to a reasonable level, although the interest rate is now reduced. Deposits and Advances. The most interesting feature of these returns is the comparison of deposits with advances yearly since 1922, and in the last four quarters: — Quarter. Deposits. Advances. Excess. £ £ £ June, 1922.. 41,388,886 46,155,933 +4,767,047 June. 1923.. 45,682,952 41,711,274 *3,971,678 June, 1924.. 47,629,312 43,885,586 •3,743,7*:6 June, 1925.. 51,463,635 43,935,76.9 *7,527,566 June, 192,5.. 48,269,349 48,714,741 1445,392 .Tune, 1927.. 46,490,366 50.753,106 f4.262,740 Sept., 1927.. 45,213,750 48.510.231 t3.601.481 Dec.. 1927.. 45,701,057 49.759,664 14,038,607 March, 1928 . 49,958,295 46,070.370 *3,887,925 June, 1928.. 52,947,133 45,426,955 *7,520,178 •Excess of deposits. tExcess of advances. This shows, as stated earlier, that there is an improvement in the year of £11,782,918, which almost exactly coincides with the improvement in our trade balance. The excess of deposits is now practically the same as three years ago, which was the highest excess of deposits since 1920. These figures show that the position has fully recovered, and is as good as at any time since 1920. The effect of the last two periods of de- ; pression is shown in the excess of advances in 1922 and 1926-27. It must be remembered, however, that, on the showing of these figures, much of the improvement in the last year is due to the higher interest rate attracting li\-ed deposit, and that now these are reduced again there is a possibility of the banks losing a proportion of these. On the other hand the reduction of the limit on deposits in the savings bank will help the trading banks in this class of deposit. Each bank shows an excess of advances. and .each bank shows a increase in deposits and a decrease in advances. Advances at the 18th of June stood at

practically the same level as the average of the quarter, whereas deposits on that date were nearly a million heavier, showing that the position is even better now than these figures indicate. Government deposits are light at £1,956,075, compared with £2,378,577 in the March quarter and £3,283,043 a year ago, while the banks holdings of Government securities are £5,104,587, which shows little fluctuation. Note Circulation and Metal. The only other items of general interest are the note circulation and metal

holdings, which are as follows:— June Notes. Coin. etc. Qr. £ £ 1928 6.430,109 7,567,494 1927 6,587,002 7,884,842 1926 6,847,555 7,795,503 1925 6,893,848 7,699,317 1924 6,643,119 7,845,745

Note circu'ation shows a moderate re- 1 duction, largely due to lesser holdings i amongst the banks themselves. Metal . holdings have been reduced by some shipments to Australia which are not of particular significance. These returns as a whole are the most cheerful we have seen, and indicate a general recovery and return to better times all round. The outlook for exports is very good for the coming season, and, if present indications are borne out, we should see an improvement in trade all round, and continuance of the very satisfactory financial position revealed by these returns. Free deposits are nearly a million more, and fixed are two millions more, the increase in the two being £2,988,838, while advances and discounts together have been reduced by £643,415. Note circulation is a little heavier, and metal holdings are £300,000 less, owing to heavy shipments to Australia, but these are still ample for all requirements. Free and Fixed Deposits. We now turn to the more comprehensive and useful comparison of the later figures with those for the corresponding quarter of recent years. Taking, first, the deposits, as follow:— FREE DEPOSITS. Bank. June, 1927. June, 1928. Increase. £ £ £ N. Zealand 11,689,926 11,966,606 276,680 Union ... 2,895,637 2,849,425 *46,212 IN.S. Wales 2,559,539 2,717,036 157,497 Australasia 2,327,555 2,516,731 189,176 National .. 4,313,270 4,332,368 19,008 Commercial 955,335 974,979 19,644 Totals £24,741,262 25,357,145 615,883 •Decrease. Figures for four earlier years were:— 1926, £27,594.496; 1925, £30,497,209; 1924, £28,336,760; 1923, £28,276,204. FIXED DEPOSITS. Bank. June, 1927. June, 1928. Increase. £ £ £ N. Zealand 10,938,803 13,425,599 2,486,796 Union 2,380,786 3,123,339 732.553 N.S. Wales 2,860,763 3,633,537 772,774 Australasia 1.761,363 2,492,507 781,144 Nat'onal .. 3,371,296 4,334,468 963,172 Commercial 426,093 580,538 154,445 Totals £21,749,104 27,589,988 5,840,881 Figures for four earlier years were:— 1926, £20.674.853; 1925, £20,966,426; 1924, £19,292,552; 1923, £17,406,748. The total deposits are higher than in any of the preceding years shown, and are the highest for any quarter since 1920. However, it is apparent that the raising of the interest rates last year is largely responsible for the increase, as the free deposits have only increased £t>15,883, while the fixed deposits have increased £5,840,884 in the past year, while the total of deposits is over a million anead of 1925. The free deposits are still five millons less than then, which probably largely accounts for the banks not reducing interest rate£ earlier. It must be remembered that all these figures are averages for the quarter, and so do not show the full measure of the growth. On June 18 deposits totalled £53,874,121, or nearly a million more than the average of the quarter, due to realisations from our exports coming in gradually though steadily. Advances and Discounts. We now turn to a comparison of advances and discounts for the June quarter of the past six years:— June Advances Discounts Total Qr. £ £ £ 1928 44.249,501 1,177,454 45.426,955 J 927 49,244,99S 1,505,108 50.753.106 1926 46.985,834 1,728.908 48,714,742 1925 42,421,049 1,514,721 43,935,770 1924 42.408,993 1.47 C.593 43,885.586 1923 40,227,094 1.484,180 41,711,274 The advances for June quarters, 1928 and 1927, for the individual banks are appended:— ADVANCES. June, June, DeBank. 1927. 1928. crease. X. Zealand. £21,^176,000 £19.242.)5i i £2,133,123 Union 6.048,248 5,176,203 872,045 N.S. Wales 6.338,887 5,620.291 718,596 Australasia. 4,780.853 4,434,749 346,104 National 9,217,280 8,422,650 794.630 Commercial. 1,483,730 1,352,731 130,999 Totals.. £49,244,99S £44,249,501 £4,995,497