BANK OF NEW ZEALAND.

Auckland Star, Volume LX, Issue 141, 17 June 1929, Page 4

BANK OF NEW ZEALAND.

FOREMOST IN DOMINION.

ITS GREAT EARNING POV/ERS,

TEX YEARS' RECORD.

The average New Zealander if asked his opinion of the Bank of New Zealand would probably shrug his shoulders and reply, "Oh it's like all the banks. Has plenty of money that it won't let out when a fellow really needs it." But let the question be put to the New Zealander when travelling in some foreign country and witli enthusiastic patriotism he will brag of the bank as a national institution, which has all the advantages ot a State bank without the drawbacks ascribed to socialistic enterprises. _ To a degree this attitude is fully justifiable. First as to ownership. Since that historic time when the late Richard Seddon came to the rescue or the bank with a State guarantee the Government of the day has always continued the predominant partner in the country's leading financial institution. Apart from the Government holding, much the biggest proportion of the ordinary shares are held in the Dominion. It is therefore essentially * New Zealand concern, and its operations ure most intimately connected with the fortunes of this Dominion. Though the Government has special representation on batik there lias tirw'aysi been a tacit nnderstanding that its administration must be entirely free from political influence. The Minister of Finance in the Reform Government, the Hon. Dowme Stewart, asserted this principle in definite terms, stating that the Government should never use its voting power in the direction of controlling the operations or the policy of the bank. jn , .. The average man may say that considering the handsome contribution made by the bank to the State in dividends and through th° Taxation Department, its consistently effective service to the commercial community, and its regular co-operation with the Government in matters of public finance, this tolerant attitude is easily but Mr. Downie Stewart was layiug down an important principle. Record Income. In considering the position of the bank as a profit-earning institution the following figures taken from the yearly accounts over the last decade are of Interest: — • .... Gross Income. Expenses. Taxes.

*Less provision for contingencies. From the foregoing it will be seen that the year ending March 31 last was oneof the roost, notable iu the bank's history. The gross income is greater than ever before. Some increase, of course, was to be expected,, seeing that capital has increased by over £100,000. This increase, however, is due to the issue of additional shares in the long term mortgage branch, and the, profits in. that department are likely to be small. A feature which will have played some part in the returns is that overdraft and deposit rates were readjusted in July last. The ordinary rate for advances was dropped from 7 to Qh per cent, whilst the interest payable on deposits was also, lowered one-half per cent. . . ' , • • What counts more in a bank s pronts , than an alteration in interest rates however, is the volume of turnover, and the proportion of exchange business. In this j connection the record overseas trade of j the Dominion for the year covered by the latest accounts will have helped materially to swell the bank's pronts. Moreover, the surplus funds in London will have contributed substantially to the two million odd of gross income. It will be noted that the changes in taxation do not. keep step with profits, j As a matter of fact the taxation of banks is not based on profits, but upon the average, of assets and liabilities assessed upon the quarterly returns. Following the trend of gross income net profits have substantially increased. Net profits., with total dividends paid and additions to reserves have been as follow:-r- ---. ■ , Additions ~ . Net t<) Profits. Dividends. Reserves. £ . £ £ 1020 012,100 002,392 247,059 3 927 847,071 771,814 200,000 1028 ..... S4I.S7S . 793.344 124,175 1920 ..... 912,054 814,893 275,000 From this it will be seen that the net profit has been sufficient to pay the usual dividends on the increased capital now being used and leave a surplus of close on £100.000. This must be considered an excellent conclusion to the year's working. Expenses Are Heavy. A notable feature in the table quoted above is the continued increase in expenses. The advance is so substantial tii'at the following details are of interest: — 1027. 102 S. 1029. . £ £ £ Salaries and allowances l at head ofiice. brunches and . agencies ... 448,485 4GC,3SO 478,853 Directors' remuneration including London Board . _S,7SO 9,313 9,521 General ex's . . 151,311 151,884 157,30G Audit ........ 2.GBS 2,910 -2,810 X ii mber . of brar:r.liPS and agencies ... 228 237 238 Balance-sheet figures over a period of years have" been as follow:— " ' . LIABILITIES. Notes. Bills. Deposits. £ £ £ ,;IG' .. 1.5G2.823 1,707,410 23,550,077 .1017 . . 2.500.325 2.007.00S 29,052,791 3 918 .. 3.312.995 2,329.559 30.437.937 l»iO .. 3,728,249 2.500,391 31,730,353 1920 .'. 5.705,337 3.708.305 37,001,011 1921 . . 4.741.492 4.110.574 34.475,055 1022 .. 4,294.230 3,713.175 28,070,603 1923 .. 4,504.095 3.739,310 30,003,927 1924 ..4.072,101 3,205,519 30,501,719 1925 .. 4.1G5.544 3.015.009 30,079.282 192(! .. 4,44'.302 3,048.285 31,121,288 1927 . . 3,7ii5.594 3.970.221 . 20,004,025 1928 .. 3,797,050 3.954.878 30,339,033 1929 .. 4,290.793 4.280,029 33,939,051 ASSETS. .....,.' Liquid, Advances. Premises. £ £ £ 1910 -■.-. 19,431,080 11.844.707 441,807 1917 .. 22,082.870 15.740,485 450.813 1918 '.. "22,020,103 17,780,755 425,824' 1919 18,805,538 309.807 1920 . *"'" '33,120,009 19,431,848 3(il'l()S 1921 30,500,020 337,409 1922 v 250,158 24,783,5C0 29(i,473 1923 ":.'" : 25,4'.'3.237 1!>,341,T«2 308,379 1924 . . 20,303,705 20,128.292 352,474 1020 .. 2(i;070.313 20,014,285 437,700 1920 .. 20,010.850 22,002,000 484,103 1927 .. 24 271312 2.':,924,980 520.877 1928 ..20,508,235 22.748,219 533,597 1929 : .... 30,930,478 22,841,453 549,383 In considering the general position of the bank the following table showing the variation in capital, the steady growth of reserves, ■ and the relation of assets to liabilities will be of interest;— '• .. . . Percentile to public liabilities X :"., : - • of -. ■. ■■:■■' kPnid Li(|iiid Totnl Capital. Reserves. Assets Assets *- & [>.c. p.C. '•"Vi . 2.240.957 on.o 118.8 '.>■„'■> r>.(«!),'jSS 2.K31.511 (17.1 120.3 I3"l . ">029.'.1HH 8,(1H8.2i>1( 07.9 122.4 "-'JO . ii.l;.-'.,')!-;S 3,;{9(),.'(7H 00.fi f>3.9 -V s -I" • (i.'i'M.fr : 'UKlO.liriM wsA VZi\,(i ';•'•* . .(]1.771,"inn :i.<'.:.,'."''s !!0.90 127.i<; ?i*-» . -,3;;;, m 4,042,001 j^4112551

Many Millions in London. Of the liquid assets it is worth noting that the money held at call and short notice in London has increased substantially. The figures for the past four years are as follows:— £ 192G 0,230,000 v 1<127 4,300,000 1!)2S 7,ll!),0S4: 1020 0,097,108 This is perhaps the most striking set ol figures emerging from the yearly accounts. At March 31 the bank held in London in one form or another over £9,000.000. It was probably earning good interest and the holding in the world's financial centre of a certain quantity of liquid securities is • usually considered sound finance. The present figures showing an increase of approximately 50 per cent in three years are certainly abnormal, and the commercial community are entitled to ask whether a few of these surplus millions could not with advantage to the country be retained in the Dominion. Investments in Australian securities have advanced £1.500,000 in the year. Speaking in Dunedin on Friday Sir Geo. Fen wick voiced a view that is bound to gain strength, namely, that the time is ripe for the banks to lower the rate for advances and generally to adopt a more liberal attitude to the trading community. It is little use politicians and leaders of commerce urging the need of more confidence in the investment of money in agricultural and commercial enterprises if our national Bank sets the opposite example by sending millions abroad instead of utilising them in the country. Probably no other single event could so well give the commerce of the country the stimulus that it obviously needs as a reduction in the bank rate. Long Term Mortgage. The long term mortgage department, established for the ostensible purpose of assisting the farming community, progresses but slowly. Evidently the number of farmers who can satisfy the conservative bankers on the question of security is not large. This department was formed with a capital of £1,400,250, and with authority to issue debentures for three times that amount—over £5,500,000 all told. So far capital raised has totalled £703,125, and loans authorised total £098,376, a veritable drop in the ocean from the point of view of the Dominion's agricultural needs.

*£ £ £ 1')'>0 .."1;37G,838 ' 430,100 450,484 liwfcC v 1,844,017 510,407 4S5,095 1D22 1800 250 528.174 577.S40 l<123 '.'.'.'. 525.532 445,671 1< : >4 2 041,8(iC, 502,500 380,001 l\y>-, '.'.'. 1775,323 507,400 367,343 1 <)•>(; '"'' 108S3O0 000,008 354,881 Vi r >7 "" 1074,302 611,270 350,740 j»28 ■:::; JeooeeS 030,453 323.330 1U20 ...... 2,12S.C0o 048,581 333.86G