BANK OF NEW ZEALAND.

Bruce Herald, Volume XXXXIV, Issue 59, 29 June 1908, Page 7

BANK OF NEW ZEALAND.

CHAIRMAN'S FAVORABLE REPORT. WELLINGTON, June 26. Mr Harold Beauchamp, Chairman of Directors of the Bank of New Zealand, in moving the adoption of the repo** and balance-sheet at the annual meeting of shareholder, said, in pursuance With the policy outlined last year, the directors desired to build up a strong reserve, and had allocated £200,000 out of this year's profits, making a total of £450,000, and with the amount carried forward £504,097. There had been a gradual expansion of deposits, and as the rate was recently raised \ per cent., the amount would probably be increased. Of late years a large portion of the surplus funds had been invested in short loans and other liquid securities in London. Owing to the demand this year in the Dominion better rates were procurable than in London, but the directors still held that it was most desirable to maintain a strong position in that city, as surplus funds can be readily utilised there, and by reason of the liquid nature of the investments are readily available when wanted here. A certain amount of stringency was experienced in the local market since the beginning of the year. and rates had hardened, the recent fall in produce being the cause. The Bank was pursuing a conservative policy, the aim of the directors being to meet the legitimate requirements of their own customers. Since the Assets Realisation Board's account had been taken over in 1906 the amount had been reduced from £832,457 to £437,780, at which the figures stood on July 15. Their Colonial Bank property and premises had been reduced to a few hundred pounds, and now disappears, being merged into . the general premises account. The directors had submitted a statement of the provident fund of a London actuary with a view to strengthening it to enable more liberal provisions to be made for retiring ofncerß.' Upon his advice £5669 was paid into the fund, and it was the intention of tho Board to continue this each year while conditions «permit. ' The pensions fund now compared very favorably with those of other" banks, and would help to attract able officers. Pensions would also.be provided for messengers. The Chairman devoted some time to the recent fall in prices consequent on the American panic, which he estimated'at more than a million and a-half. This would affect land values; a drop in some respects would be no evil, especially in building land. For farming land thore wbb still an excellent demand, and prices would probably recede a little when the effect of the graduated land tax was felt*and the native areas came into the market as a result of the Native Land Commission's labors. The outlook, he admitted, was not so rosy as it was last year, but after ten or twelve good years the community could stand a slight business check without trepidation. Mr Beauchamp quoted figures showing an increase in the national wealth and a decline in bankruptcy returns, which, he said, proved that at no period were we better situated to face a set-back. He did not believe it would last long, for American reports were reassuring, and money had cheapened in London. Still, caution should be the watchword. Some nouses had been overtrading, and indiscriminate in giving credit, and farmers had been paying an excessive price for land. Tho Government had appointed Mr J. B. Peid director, vice Mr F. C. Malot, who had resigned in consequence of ill-health. In recognition of the good work of the staff the Board had granted a bonus of 5 per cent, on salaries. Mr Watson, who seconded the motion, said when he first became connected with the Bank in 1894 it was his unpleasant duty to report to the Colonial Treasurer that out of £11,000,000 of so-called assets less than half were profit-earning, while interest was being paid on deposits, etc., aggregating £6,866,000. Now they had profit-earn-ing assets of over £15,000,000 all sound and good, against an interest-bearing liability of about £8,000,000. This showed what an up-hill battle they had fought. To-day their profit was over £300,000, and no doubt shareholders might think they were entitled to a beter return for their money. He did not believe they would have to wait much longer, but they wanted a solid reserve first. If they could build that up and pay increased dividends he would be in favor of doing so. More capital, however, would be required in future. He explained the position of the Government and shareholders, and quoted the speech delivered by the Premier last session to show that the Government had no intention of interfering with shareholders' rights. The Government guaranteed a million stock, and had four directors to the shareholders' two, but when that stock was paid off it was reasonable to suppose/ the shareholders would have more representation. In fact, he thought they should have more now, though he recognised that the Government should have efficient checks and fair representation on the directorate. Mr Beauchamp, in acknowledging a vote of thanks, read a report from the manager of the bank's produce department in London, dated April 16, ascribing the fall in wool to the American panic, and stating that relief was looked forward to from the same quarter at a not very distant date. The position in the United States was gradually improving, and wool would be one of the first commodities to benefit. It was expected that the meat market would benefit from the influx of visitors to London drawn by the FrancoBritish Exhibition. Mr Kibbell thought they should pay a little more attention to small depositors. The Government had raised the interest on Post Office Savings Bank deposits by jj per cent., and had the bank raised its rate to Z\ per cent., it would have had a fair share of these deposits. Mr Martin Kennedy said the dividend provided in the balance sheet represented only 25 per cent, of profits as against 60 to 70 per cent, paid by other banks. If 15 per cent, dividend was payable on the present face value of shares it would only give 5 per cent. on their actual cost. He hoped the time was not far .distant when shareholders would have a more- equitable representation on tho board. When the present basis of representation was fixed it was for the Gov- ; ©rnment guarantee amounted to about £5,000,000, whereas to-day that was reduced'to £1,000,000. A motion to increase the remuneiratfon to the directors was withdrawn, it. Waft explained that, the directors

did not desire a higher remuneration. The report was unanimously adopted, and votes of thanks passed to the chairman, the directors, the general manager, and the staff.