BANKING RETURNS.

Auckland Star, Volume LXIII, Issue 160, 8 July 1932, Page 2

BANKING RETURNS.

EXCESS OF DEPOSITS. CREDITABLE IMPROVEMENT. REDUCTION IN ADVANCES. (Hv Telegraph.—Own Correspondent.) WELLINGTON, this day. For tlu; last six months the banks have, been much better supplied with funds than for some time prior to that. From August, 1930, on till last November advances were consistently in excess of deposits, except in August of last year. After last November, with imports well reduced, the money starting to come in from the"realisation of this season's produce swung the balance over to an excess of deposits, and deposits have remained in excess since early in December, except for a short period during March. At March 14 advances were in excess by £501,932, but on Juno 13 deposits were in excess by £2,244,247, and in all probability will remain in excess for about another two months, till demands begin to come in for assistance in gathering and marketing the coming season's produce. The figures now under review are the averages for tho •June quarter, and they show a moderate improvement on the averages for the March quarter. The average excess of deposits for the June quarter is £1,635,387, compared with £1,232,774 for the March quarter, and an excess of advances of £2,220,147 for the June quarter of last year. This shows a very creditable improvement of £3,801,534 in the year, and is brought about chiefly by reduction in advances, no doubt largely due to reduced importations and consequently smaller carrying of stocks of imported merchandise.

Fixed Deposits Still Growing. Following is a comparison of the principal features of the latest returns, with those of the immediately preceding quarter i—

Fixed deposits are still growing at the expense of the free class, but the total of the two classes shows an increase of £751,071 in the quarter, against which advances and discounts together show an increase of £340,058, leaving a net accretion to the banks' funds of £402,013. Government deposits show a decline, and the holdings of Government securities have an upward jump of two and a half millions. Metal holdings have dropped £301.114, and note circulation has a healthy increase of £140,331. Earlier Years Compared. The foregoing are the quarter's movements, which are largely affected by seasonal fluctuations. Comparisons with the corresponding quarter of earlier years are more instructive. Taking first the deposits, we find the movements as follow: —

There is a satisfactory increase of £1,047,395 in the year, but the total is below those of earlier years, notably 1929. The most noticeable feature of tiiis comparison is the steady growth in the fixed class, a movement which starts from 1027, when the total was £21,749,104. This has naturally caused a steady decline in the free class. The movement is due partly to action by the banks to attract fixed deposits and partly to a preference for his form of investment in unsettled times, when many outside investments are unattractive, especially industrial enterprises. Discounts and Advances. Turning now to the other side of the ledger, we find the following movements in advances and discounts:—

There is a very satisfactory decrease in the year of £2,514,130, due mainly to restricted importation and the consequent reduction in stocks of imported goods. Discounts are at a low level, as with keener competition more cash business is being done. The most interesting feature of these returns is the relationship of deposits to advances, ae it is this that shows the amount of funds available with the banks, and the June quarter of recent years shows the following movements: —

In 1928 and 1929 the banks were overburdened with surplus funds, but the serious drop in export values -without tho necessary prompt reductio,n in. imports caused an excess of advances in 1930 and 1931, and the June quarter is practically always the period in which (lie banks are most flush of funds. However, this year we are back to an excess of deposits, and the improvement in the year amounts to £3,861,534, which is very satisfactory. Tho present surplus will, however, all be required to finance the period up to November, when exports are very light and finance is needed till returns begin to come in from next season's exports. Shares of the Banks. The shares of the individual banks in these deposits and advances are as follow:—

The Xcw Zealand and National have all the increase in deposits, while each bank shares in the decrease in advances. The Union, New South "Wales, and Australasia have all lent out more than tho amount of their deposits. The Government deposits, which are not included ill the foregoing- figures, are at the low level of £1,790,518, which is less than half the amount of a year ago. Tho banks' holdings of Government securities is £9,153,181, or double the figure of a year ago, showing the banks are financing the Government to a fairly heavy extent. Note Circulation. The only other features of these returns that are of any general interest are the metal holdings and note circulation, which compare as follows:—

The metal holdings have r>een reduced in recent years by the export of surplus gold not required here, while there is a certain amount of illicit withdrawal of anj* gold obtainable, also some English silver currency. The note circulation shows a satisfactory improvement, indicating that there is still a fair spending lj(JW%r, though below the level of earlier ye«vs.

On a general survey the latest returns display very satisfactory financial conditions —the banks are amply supplied with funds for present requirements, and appear in a good position to finance the lean period till November. The improvement of £3,801,534 in the year in the balance between deposits and advances is excellent, and the immediate future is provided for. After that the situation depends very largely on the prices realised for the coming season's exports, but the banks may be relied on to meet the situation and do their best for the community generally.

June, March, 1931.'. 1932. £ £ Deposits, free 10,815,882 36,008,822 Deposits. IiximI .... 33,400,900 34,400,28!) Deposits Govt. , ... 1,706,518 3,871,774 Note circulation .. 0,021,350 5,875,025 Coin (in<1 bullion .. 0,207..187 6,508.7(11 Discounts l>00.301 712,700 Advances 49,015.034 40.mo.031 Govt. .securities ... 0,133,181 0,597,824

June Free. Fixed. Total. qtr. £ £ £ 1032 .■ 16,815,882 35,400.900 62,216,782 1931 . 3S.124,162 S3.045.22."> 51.160.387 1030 . 23,223,S04 30.522,174 53,748,038 1929 . 2O,S1O,SS1 ."30.241,013 57,051,S94 192S . 25,357,145 27,5S0,9SS 02,947,133

,Tune Discounts. Advances. Total. ntr. £ £ £ 1032 ... 6fi<i.n6l 40,015,034 50,581,305 1031 ... S0."i,(>74 52,100,SRO S3,K9r..r>:!4 3030 ... 1,188,000 52,S74,472 D4,00.'U (i'J 1020 ... 1,O3S,427 46,303,784 47,407,211 102S ... 1,177,454 41,240,501 45,420,955

Excess of June Deposits. Advances. Deposits. qtr. £ £ £ 1032 . 52.216.7S2 50,581,395 1,635,387 jn.'U . 51.160.3S7 53,395,534 *a>2245.147 11130 . 53.74S.03S 54,003,1G2 *315,124 1920 . 57,051, S0+. 47,407,211 0,044,GS3 19*'S . 52,947.133 45,4*26,955 7,520,17S 1927 . 40.-100,366 50,753,100 *4,202,740 1026 . 48,200,349 4S,714,742 * Excess of advances.

Deposits. Advances. Banks. fi £ New Zealand 25,7G8,6S9 2."?,628,744 Union 5,783,704 ">,919,207 Xew South Wales . f>,710, ','11 r»,937,461> Aiistrnlasin 4,. r ,r>8,e«9 4,790,130 National 9,017,321 8,949,179 Commercial 1,427,787 1,350,604

Notff Coin and June circulation. bullion, quarter. ±: £ 1932 0,021,350 6,207,587 1931 3,815,713 6,926,030 1030 U,433,265 0,797,684 192JJ 0,547,872 7,217,307 1U2S (J.43-M09 7,567,494