FACTS FOR INVESTORS.

Auckland Star, Volume LXIX, Issue 196, 20 August 1938, Page 4

FACTS FOR INVESTORS.

NATIONAL BANK.

DOMINION INSTITUTION

SIXTY-SIX YEARS OLD,

The latest account® issued by flhe National Bank of New Zealand from its head office in London represent the sixtysixth year of operations, for the bank was established in 1873. Though its genesis was in London, which has always been its headquarters, its business has been virtually confined to this Dominion, and, with branches in all New Zealand centres it has always played an important part in the financial affairs of the Dominion.

Apart from a sharp increase in advances there are few special features in the lates-t accounts. Until 1935 the were in the habit of publishing a profit and loss account, which, while containing little in the way of details, least gave the amount of groes profits and of expenses.

During the last three years even this information is withheld, and all that appears under the heading of profit and loss account is a statement of balances, net profit, appropriations, and a memo notifying the amount of directors' remuneration. The following tables indicate the fluctuations of the business over a period of years:— Net Profits. Reserves. March. £ Dividend. £ 1020 200,.">82 14 p.c. 2.155,154 1030 282,017 12 p.c. 2.174,171 1031 208.286 10 p.c. 2,168,457 1032 177.8: Mi 7 p.c. 2,142.204 1033 116,440 4 p.c. 2,114,742 1034 135.674 4-p.C. 2.106,416 1935 102.04!) 4 p.c. 1,615,366 1036 102,504 4 p.c. 1,613.050 1037 102.838 4 p.c. 1,612,707 1038 105,727 *4A p.c. 1,613,600 * For tJi-o first half of the year an interim dividend of 4 per cent free of tax was paid, and for the second half tlie distribution was 5 per cent, subject to English income-tax of 3/8 in tfre £.

Perusal of the above table shows the bjg change that has come over the National in common with other banks, so far as profit-earning capacity is concerned. In the boom period profits were nearly three times those obtainable to-day. Business was flourishing and there was an insatiable demand for money at rates that were high enough to leave a fair margin over and above the scale allowed to depositors. Overseas trade, too, was brisk, and there were heavy dealings in exchange. To-day business has definitely recovered from the slump, but everything is on a smaller scale. Interest rates are low, the Government has commandeered the exchange business and some of the export trade, and the only factor which haa not diminished is the taxation rate. Advances and Deposits. The extent to which the bank has met the need of its customers under varying conditions is shown in the following table:— Ratio Advances to Advances. Deposits, deposits. It arch 31. £ £ p.p. 1020 ... 10.3fi1.671 in..V)7.OW 0R.05 in.il) ... 11.2t5.274 12.165.675 92.45 10.11 ... 10.638.587 11,657.303 ill .26 10,-?2 ... 10.186.729 12.314.H2S 83 00 ISM 3 ... 0.855.600 13.7ffT.817 71.58 1034 ... 8.024,044 15,505.886 57.22 3-135 ... 0.422.430 13.554.850 60.51 1036 ... 10,361.255 13.655.182 75.87 1037 ... 30,076.756 13,751.541 70.52 1938 ... 13,117,050 13,008,667 04.24 The larger proportion of advances registered last year is a reflection of improved usiness conditions. The Balance-sheet. Movements in the chief lines of the balance-sheet during the past three years have been as follows:— 1036. 1037. 1038. Liabilities— £ £ £ Capital.... 2,000,000 2,000.000 2.000 000 Reserves .. 1,500.000 1,500,000 1,500.000 Notes .... 00.820 — Deposits .. 13,655,182 13,751,541 13,008,667 Other liabilities 1,5(50.812 1,488.645 1,334,170 Assets— £ £ £ Coin and notes 3.307,418 2.365.044 2,137 710 Investments 2,607,211 3,536,851 2.220 728 Advances, i>.., . etc * 11,431,230 13,117.040 Bills etc . 1,637,780 037.442 777,331 1 remises . 624,890 021,507 035,513 Total ... 18,068,774, 18,892,983 18,897,361

address at the annual ifteeting the retiring chairman, Sir Austin Harris, stated, inter alia: "Landed property and premises are this year valued at. £635,500 an increase of £14,007. This figure, representing the cost of our property, less writings off, is considerably below ite actual value. During the year we have opened branches at Tauranga and Waipukurau, and in addition have new buildings in course of construction at Hokitika .Newmarket, and New Plymouth, which accounts for the increase to wthich I have referred.

The difficulties I referred to last yearloss of exchange business, low interest rates, apd increase in cost of labour, all enforced -by legislation—remain with us and it is still far from easy for the banks operating in New Zealand to make profits Ibe improvement in profits this year, therefore, is very satisfactory, especially as it has been achieved after providing considerable increases in staff salaries.

"The deposit and advance Hgures for all the banks m !New Zealand show the same tendency as our own. Taking the average figures for the Mairch quarter, deposits were £66,064 000, or £223,000 less than a J ear ago, whilst advances at £53.640,000 had increased by £6,608,000, resulting in a decreasein banking resources of no less £6,922,000. Interest-bearing deposits were 50.1 per cent of the total deposits, as against 51 per cent last year. With vh6 decrease in banking resources and the continued falling off in the percentage g° 81 . ts t 2L e competition of the i ost Office Savings Bank has become more than ever acute. Our remedy would of course, be to increase the rates we offer for deposits, but, as this would involve an increase in advance rates, which is directly contrary to the policy of the Government, w e hope that the' difficulty nifty be met in #onie other way. Handing Over. Concluding his address, Sir Austin Harris eaid: v_L . the time has now come ael l co "e?Bues to release th f chairmanship of the bank, and I am pleased to tell you that Lord Balfour has accepted their invitation to assume this position. I hope to continue my connection with the bank bv remaining on the board I should not be takinLVnftJVJf present juncture had nnT;?Li e l 1 W ie , bank ifi in a sound i2 y " have through some difficult and lean years, and it is satisfactory to me. on the last occasion on which I shall address you as chairman, to look forward to better times and to close my speech with words of qualified optimism. I am satisfield that provided we are not subjected to anv further political restrictions we shall be able to continue to render good service to the l>ominion and to adminster the bank in a manner which will I hope, give satisfaction to yourselves. Values Of Shares. The market price of the shares at this date m recent years has been as follow:— £ d - e s. a. 1924 .. 6 11 6 1032 .. 3 14 « 1&25 .. 6 13 6 1033 4 0 O 1028 .. « 16 o 1034 .. 3 IB 0 .. 6 15 0 1035 !. 3 8 9 8g::5 A 8 BS?S g g 55S 1958 •• 212 3

The nominal value of the shares is £7 t ?|. yhich, £2 10/ has been paid up. ? «4j t ° ere ' 8 a contingent liability of £7 l(y per share, which is only payable in the event of winding up. The return to present purchaser* in New Zealand currency, based on current dividends, a 6hade under i% per cent per annum.