BANK OF NEW ZEALAND.

Press, Volume LIV, Issue 9816, 27 August 1897, Page 5

BANK OF NEW ZEALAND.

ANNUAL MEETING.

(PRS&3 ASSOCIATION TELEGRAM.)

WELLINGTON, August 26.

The annual meeting of the Bank of New Zealand was held this afternoon, Mr Wiu. Watson (the President) in the chair. About thirty shareholders were present. The report and baLance-sheet Were read and adopted without discussion. The following is the balance-sheet of the Bank of New Zealand to March 31st, 1897 :— INABILITIES. £ B. 4 Capital—Fear per cent. Kua.ra.nteed stock £2,000,000, preferred shares issued to Crown £500,000, c.i)>ital called up under the Bank of Sew Zealand and Banking Act, 1895, £500,000 (amount paid to date £244,141 2s Id), nominal re-s-rye liability on gimrej £810,000 3s 7d .. " .. .. .. 2,744,141 g 1 Reserve fund invested iv Government securities.. .. _ 23,474 7 <\ Notes in circulation .. _ 557,497 0 0 Kills pa sable in circulation _ 1 337681 17 7 IVlKwtl* «. 8,230,955 17 10 Other liabilities .. _. _ 601,718 16 6 Bills re-dU-xmntecl .. _ 50,445 9 11 Balance of jrofit nrl'llose.. „ 39,391 2 11 Grand total _ .. .. £13,635,505 14 2 ASSETS. £ s. d. Coin and cash baUncas at Bank .. 1,557.501 5 8 Bullion ah hatul ami iii Iratuitu .. 132,650 18 2 Investments—Colonial Government securities £Y80,9W 16s 5.1, Assets Heali.sar/iou Board debentures £2,650,235 6s 3d, municipal securities £15,567 6s Id, other securities £32,600, total investments .. 3,509,30111 3 Bills ro.:viv,vWa and bill* discounted 2,649,881 13 4 Other advances and securities and debts due to the Bank .. .. 4,509,895 10 4 Esttmac <l amount recoverable on account first call reserve liability 4,141 5 8 Landed properti-, premises, &c. .. 442,851 16 6 Bank of New Zealand KstAtee Company, /limited, onsets in liquidation (1595 vuluation) .. .. 580,065 510 Bank of New Zealand Estates Company, Limited, debenture conversion account .. .. .. 69,445 0 0 Colonial Hank property and premises (book value) .. .. .. 105,481 7 5 Colonial Rnnlc purchase goodwill account .. .. „ 75,000 0 0 Grand total .. '~ .. £13,655,305 14 2 PROFIT AND LOSS ACCOUNT. £ 8. (1. Dr.—Three months' dividend to 31et Afni-cl), 1856, on preferred shnre capital., .. .. .. <i,375 o 0 Net balance of profits at 31st Marcli, 1896, paid to Assets Realisation Board in terms of the Bank of New ZenUnd and Banking Act, 1895, section 11 .. .. 35,708 17 0 Twelve months' dividend to 37st March, 1897, on preferred share capital 17,500 0 0 Balance tor the year ended 3leb March, 1837 ■.. .. ... 39,391 211 Grand tofc.il .. .. .. £96,974 19 11 Ci , .—Balance from the yeat ended 31st >f;irch, 1896, £52,576 2s Id— less amount disallowed upon adjustment of price to be paid by the Assets liowd in terms of th« Bank of New Zealand and Banking Act, 1895, £12,492 5s Id .. 40.083 17 0 Profits for year ended 31st March, 1897, including recoveries and after payment of and provision for all interest due and accrued on deposits and guaranteed stock, l provision for bad and doubtful debts, and writinjr down of bank furniture account ... .. 56,891 211 Grand total ... „ „ £96,974 19 Jl The report accompanying balance sheet was very brief, merely stating—"The Directors have to submit to the proprietors the annexed balance sheet of the Bank for the year ended 31sc Maroh last. The retiring Directors are Messrs Booth and Kennedy, who are eligible for re-election, aud are the only candidates. During the year the sub. agency at Eketahuna, previously visited from Pahiatua, had been made a separate agency, and the Town Hall Branch, Sydney, New South Wales, closed."

The President's address was as follows :•— " The balance sheet for the year ended 31et March, 1897, has been placed in your hands, and from it you will see that the net profit, after provision for bad and doubtful deots, is £55,891 2s lid. We deem it right, however, to toll you that, without explanation these figures do not correctly indicate the earning power of the Bank, inasmuch as the actual amount earned after payment of all interest dlie "and accrued on ■ deposits and guaranteed stock was £125,356 10a 3d, and had it not been for tho very large additional provision which the Board considered it necessary to make for two old and disastrous accounts, evidence regarding one of which was given by the Government I Auditor to the Parliamentary Committee on 23rd September last, tho profits would have j been sufficient to meet the obligations to the Assets Realisation Board, and leave a surplus of £20,000. This surplus would have been available for the purpose of writing down the debenture conversion account, and the payment of a dividend to the shareholders, and but for tho necessity of meeting out of last year's profits, the sum. of £12,492 5s Id, disallowed upon the adjustment of the price paid for properties by the Assets Board, the surplus referred to would have amounted to £32,000. As it is the amount of profit earned during the year under review has justified our estimates, and we have £59,391 in hand to go towards our statutory payments to the Assets Board. When this payment is made onr arrears to the Assets Board will be £24,900, which, in view of our earning power, is not a very large sum to contemplate the extinction of. Before leaving the subject of profits I may remind you that for only nine months of the past year were the finances of the Bank in a good working position, as comparatively idle money had to be kept until June, 1896, to pay debentures of the Estates Company and Auckland Agricultural Company. Since that time the Bank's finances have been on an improved footing, and its funds have been fully employed, but the low rate of interest now ruling for advances may prevent profits from increasing very much in the near future. As to provision for bad and doubtful debts we have proceeded, from time to time, according to the best of our judgment, and as liquidations and other events guided us. Iα May last, at the request of the Board, I went to Australia and was joined there by Mr Martin lifinnedy. We made a most careful examination of the Bank's assets and affairs generally.with the result that the Board are now quite satisfied as to the safety with whwhthe business is being oonductetl thoro. It ia only fair to the present Board and the recent management to Bay that of £68,400 deducted from the past year's profits for bad and doubtful debts not £4000 belong to the administration since 1894. I will now aek you to advert to items in balanqo sheet which call for remark or explanation. The Bank's capital is increased since last year by £196,717, being payments on account of the call on ordinary shares, as per section 9 of the Bank of New Zealand and Banking Act, 1895. The whole call is £3 6a 8d per share on 150,000 shares, or £500,000 in all, and only two instalments out of fonr were payable up to 31st March. The reserve fund shows a trifling increase of £56, caused by an adjustment of the premium obtained on the sale of 34 par cent. Government securities, in accordance with the Act. The notes in circulation show an increase of £24,268, and the bilk payable in circulation an increase of £714,449, consequent on expansion in both local and exchange business. The deposits chow a decrease of £1,663,823. The actual business deposits, however, have increased, the deficiency mentioned being more than covered by Government drawings, principally on account of advances to eottlere, by fixed deposits paid off in London, in pursuance of the Bank policy, and by paying temporary deposits of the Estates Company and ( the Assets Board. The item " other' liabilities" is nearly the same aa lasfc year. It in made up by the amount set aside to provide for bad and doubtful debts not yet written off, the amount retained to meet deficiencies in certain accounts taken over from the Colonial Bank and the amounts set aside in the adjustment of fixed deposit interest accrued but nob paid, and discount on bills received, but not earned at 31st March. A new item appears as ''Bills rediscountod £50,445 da lid." It consists of bills of exchange rediecounted in London, which we considered would bo more properly shown m this way than in a foot note to the balance-sheet. Turning to the assets side, the " Coin and cash balances" are less by £73,323, which is however more than made up by the increase of £98,669 in Government securities. The *' Bullion on hand and in transit " is higher by £16,858. The coin, bullion and Government securities added together, amount to £2,471,190. whioh eaowe ample strength, and when to this Jβ added our holding <rf

Assets Board tjebentnrcs, £2,680,285, pay* ment of which is guaranteed by the colony, the superior Btrength of the Bank's position cannot fail to be recognised. The coin itself is more than am Die for wants, and the increase of £93,000 in Government securities adds to the earning power, whilst helping to maintain a strong reserve against de« posits. The *' municipal securities " have increased by £6740, "other securities" have decreased by £345,561, being principally Estates Company debentures redeemed. What we now hold under this heading arc debentures other than Government or municipal, but of a substantially secured and undoubted elaes. "Bills receivable" and " bills discounted " have increased by £128,229. Ihis is chiefly iv bills of exchange against produce, although our local trade bills discounted have also increased. "Other advances and securities aud debts due to the Bank " show the enormous falling off of £2,772,630, and the Bank of New Zealand Estates Company share' account, which stood last year at £1,089,822, has altogether disappeared. To a great extent these had been replaced by Assets Ronlisa« tion Board debentures £2,080,285, the Bank of New Zealand Estates Company assets in liquidation £580,065, and debenture convemion account, £63,445. Part of the reduction in "Other advances, &c," was by loans m London being called up to pay off fixed deposits and Kstat&s Company and Auckland Agricultural Company debentures there. The actual business advances, apart from bills, increased during the year by about £160,000. The item, "Estimated amount recoverable on account first call reserve liability £4141," requires this explanation, that iv 1595 we estimated the first call to produce £450,000. Provision for losses at that time and tlw writing down of the Estates Company's assets to the valuations of 1895 roquired the full amount of £450,000, and we consider that from the wny the call has come in we were justified in our estimate, and are still justified in expecting that the small sum outstanding, which is less than 1 per cent, of the original estimate, will bo recovered within a littlo time. Since March the amount has been roduoed by £660. "Landed property, premiaee, &0.," has been augumented by £19,318. Wo expended for the purchase of l.ho corner opposite to the National Mutual haihliug, £10,500, lor the 4?iUi frontage in Ltuubtcm quay, next to the Wellington ofiice premises, £6000, and in Dauevirke £900. Properties aud promises were taken over from the Colonial Bank account to meet requirements at the Bluff, Cronjwoll, Oainnru, Opliir, Palmerston (Otago), St. Bathans and Weatport, aggregating £13,700. Additions to premises at Hawera and Te Avo cost £1600. On the other hand, sales of properties and premises amounting to £6500 have taken p/aoo at Auckland, Adelaide, Ashburton, Kketahuna, New Plymouth and Westport. The furniture which stands in this account has been written down by £3000. Since the balance sheet date wo have sold a section opposite to the National Mutual Buildings for £11,000, making some profit besides interest on the transaction. The Board intend to ab onoo erect suitable premises on the Bank's old site at the corner of Lainbton and Custom Mouse. Quays, to which will be added the section lately purchased in Lainbton Quay. We now come ta the item " Bank of New Zealand Estates Company, assets in liquidation, 1895 valuation £580,065," regarding which we wish to fully inform you. When, in 1895, the Legislature provided that the Assets Realisation Board should relieve the Estates Company and Auckland Agricultural Com* pany of assets, there was a residue left for these Companies and the Bank to deal with; and this residue amounted, according to tho valuation then made, -to £849,751. It will be seen that, during the eighteen months which have elapsed since the legislation of 1895, reductions have been effected to the extent of £269,686. The properties actually sold, however, amount to much more than this, indeed to £222,425 more, but as the money has not yet come in, being payable by instalments or otherwise, it baa not been carried to the credit of the account. The amount unsold, therefore, is only £357,640, and the Directors will spare no efforts to effect sales. Some of the remaining assets have paid well for years, but ifc is lamentable that in the colonies, when securities for advances have to be sold by a Bank, thoir values generally become depreciated in the market} and the utmost difficulty is experienced in quitting them without undue sacrifice. We have been advised by two independent counsel that, so far as this account is conoerned, wo urns* treat it as fixed capital at the valuations of 1895, until its complete realisation takes place, when any deficit or surplus can be debited or credited to the Bank's profit and loss account as the case may be.. Wβ are not sanguine, however, that the amount outstanding will be fully realised. The "Debenture conversion account, £68,445," represents the remainder of the snm expended in redeeming about £1,800,000 oi the Estates Company and Auckland Agri* cultural Company debentures, which owried high rates oi interest. By their redemp* tion the Bank saves fully, £25,000 pBP annum. The total amount of the cost, including premium, of converting and re* deeming these debentures was £105,800, SO that a large proportion of it has already been provided for. The " Colonial Bank property and premises,' £105,481," represents the remaining properties at their cost. We are legally advised that, as these properties are sold, if deficiencies arise the' Bank may provide, for the "purchase of goodwill account, £75,000," we are advised is a capital asset which, while our present obligations to the Assets Board last, cannob be provided for out of not profits. I have now given you a complete account of the Bank's position, and if there is anything which is not quite clear to any shareholder I shall be glad to answer any question which I properly may. The staff, with the exception of one or two juniors not now in the service, have worked well, and loyally assisted the Board in carrying put the onerous duties devolved upon them. Mr 0. <£. Tegetmior, formerly Manager in London, has been appointed General Manager. The Bank of New Zealand h#s now, despite many drawbacks, securely entered upon a promising career. It hiw fulfilled the expectations formed of it l>y those to whom three years ago its direction was entrusted, and it may reasonably be anticipated that it only requires a continuance of careful and able management to ensure continued success. Trade in the colony is in a flourishing condition, the country ia being steadily opened up, and the depression, which for bo many years hung over the cities, has at length been removed. Still, while ie may be affirmed that New Zealand is prosperous, ife cannot be said there is anything in the I nature of undue inflation in either commercial, agricultural or pastoral affairs. The outlook is, therefore, tree from dread, and steady progress may be reasonably expected. "1 now announce to you that the twelve months' dividend to 3isfc March, 1897, on preference shares, amounting to £17,500, has been paid, and that the balance of profit, £59,391 2a lid, will immediately be paid to the Assets Realisation Board according to the Act of 1895. Sir It. Stout referred to the rumour that Mr Birch, a Manager of the Bank in the South, had been dismissed, and he asked if it was true. He also asked whether the Bank's Managers were allowed to become Directors of Companies. The President replied that the question o£ the dismissal or resignation of officiate of the Bank was a matter for the consideration of the Board, and one that should not be discussed afc a meeting of shareholders. Aa to officials accepting positions on the Boards of Companies, there was nothing in. the rules against it. In instances where officials accepted such positions the usual custom woe t6 apply to the Board for permfseioa, and the Board considered whether or not it was to the interests of the Bank to give consent. Each case was considered on ita merits. .... Sir R. Stout replied that he thought it) ■was not proper. Messrs M. Kennedy *nd W. Booth, the retiring Director*, wer** re elected without opposition. „ Sir Robert Stout next referred to toe rumour that the Directors of the Bank were trafficking in shares of companies which were clients of the Bank, and asked if it waij true.

The President replied that be was unaware to what Sir Robert Stout was re« ferring, and added that he paid little atteo* fctois to street gossip. •"■ Mr T. W. Mnuskenrie moved a vote of thanke to the staff, and thought if the eh»reholdera had patience all wonld come out righfc. Mr q. O. Tegetmeter wW the Bonk bad aa exoaUent) Mad efitotait *wk Vβ

dft.iiiitis! to advance the welfare of the 3jksk. He »"tindently looked forward to the rathe whfu the institution would troublesome times. ; . ■ W-' Mesons Booth and Kennedy thanked. , tjW shareholders for their confidence, in "freelecting them, and declared that the Board hail m> interests to serve other than those of the shareholders. Mr Kennedy in referring to the remarks re members of the Board taking shares in other companies said he himself was connected with a company which had an account with the Bank. It was a strong account, and he asked would it b(5 to the in tercets of Mie IJjuik to have this removed. He was confident that no perMonal feeling influenced the Board in its decision as to tho transaction of the Bank's business, whether or not connected with ether companies. The meeting then ended.