BANK OF NEW ZEALAND.

Press, Volume LXV, Issue 13597, 4 December 1909, Page 10

BANK OF NEW ZEALAND.

HAIiF-YEARIA" MEETING.

WELLINGTON, December 3

At the half-yearly meeting of shareholders of the" Bank of New Zealand, fceld to-day,

Mr H. Beauchamp, Chairman of pirectors, said:— At our half-yearly meetings, no statement of account*, as you are Iware is presented. Our principal business is the election of a Director, and for that position Mr Martin Kennedy—who has occupied a seat on the Board continuously as your representative since 1894—again offers his services There being no other candidate, I have nracfl pleasure in declaring jlr Kennedy duly elected. When addressing you m June last, I mentioned that, consequent upon the conservative policy then being pursued h this and other Banks trading within tbe Dominion, you should be preparf or a diminution in our profits. Our for the haif-year ended 3uih September ebow that these anticipations were realised. Still, the results w die tjeriod under review are gratifying anfl have no doubt that, at the rloao of the present iinanciai year, we ebaU be able to transfer a substantial Sunt to our Reserve Fund and reSnend the payment of a dividend Sd bonus equal to that you received for the year ended 31st March 1909. •In the meantime, for tha half-year ended 30th September the Board has Glared an interim dividend of o per cetr!o the holders of Ordinary Shares, and a similar amount in respect to the Preference Shares issued to the Crown. This dividend will be payable Office on Monday nest, bth inst., and B t Branches on receipt of advice If the proposals now before I'ariiajnent regarding the taxation of Banks become law, this institution will be Aalled upon to contribute a much, larger BU m than it now does. Calculated upon the present volume of the BanKs business, the increase will amount to not lees than £15,000 per annum. It may interest you to know that our taxation under all heads last year totalled £35,640. This, I may mention, included payments to Municipalities and Publio Bodies as well as to the General Government. With these preliminary remarks, 1 desire now to congratulate the shareholders of the Bank, and the country generally, on the better and more promising monetary conditions that prevail to-day, and I do not think it would be improper on my part should I claim some credit for the Banking mstitrations of New Zealand for the change that has taken place. A year ago, the Banks were criticised inside end outside of Parliament for not lending freely, notwithstanding that, •the aggregate of the advances and discounts, as at September 30th, 1908, exhibited a very substantial increase on the figures of the previous year. A good many people are under the impression that it is the- duty of the Banks to advance against all and every kind of security. The sooner this impression ie removed the better. .That the bankers of the Dominion pursued the right course during the past twelve or eighteen, months is proved to some extent by the easier tendency that now prevails in the .local money market. The Banks are to-day in a much stronger position, and quite capable of furnishing all the legitimate banking acoommoda•tkm that may he required. The Bank returns for the past quarter show the strength, and we have but to compare the aggregate of the fixed and free deposits and the advances and discounts with } the figures for the corresponding quarter last year to appreciate the point. They are as folJows:—

Fixed and Free Deposits. 1909. 1908. Bank. £ £ New Zealand . 10,199,028 9,496,580 .Union ... 2,790,889 2,786,534 New South

; Wales ... 3,009,416 3,057,706 Australasia ... 1,736,224 1,771,716 National *.. 3,243,563 3,197,471 ■''-'- 20,310,007 (Not©: These, figures do not include Government deposits.) . . Advances and Discounts. How, Zealand 7,091,411 8,480,888 Union- ... 3,160,610 3,371,232 Jfaw.-South Wales ... 2,505,193 3,211,533 'Australasia ... 2,756,305 3,296,663 -Nations. ».. 2,657,188 2,857,643 18,170,707 21,217,959 _____ year the Banka helped their teu___mei» liberally, and' to this. is Itogely due the fact that the deprnsiioa was mild and of short dura--7 A distinct revival in trade ap*_sjs to have set in all over the world, hat mMrtaotaku-lj in the United States late years the storm centre of the 7 world. Every mail received «*p*-t% ___a. brought intelligence of : xenesed activity in one industry or 'another. . The steel trades are particularly busy, the demand for steel ■ -specially'; strong. The ■' Railroad Companies of America have - |**tt 7 development works in hand, ™* Prospect, involving an expen«htore of many million dollars. The BmOT B_ctfic. and Southern Pacific BMtmty systems have extensions aggresVtißS approxunately 2000 miles in ooarse or construction, .lie production 'of pig-inn in the wnteel States v now np to tho highcet level of recent years. The report of the Steel Syndicates states that the orders on their books on September lOth amounted to about 050,000 tons more than at the corresponding period last year. In Great Britain there is a distinct . faMovement. SMpbuilding—-the main andnstry of the United Kingdom—is Mowing signs of areoovery. According to ''Lloyds' Register of S__ipbui_di-ig .Returns," the tonnage under oonstruc*ian on September 30th was albout 32,000 tons more than that which was in hand at the end of the June quarter, and about 45,000 tons more than was building twelve months ago. The European and American money markets ax© at the moment rather high, (the Bank of England rate now standing at 5 per cent.), but this is not an unusual feature at this time of the year. The Mother Country is unfortunately disturbed by a pending political crisis, for s> general election ia a great drawback to trade.

The favourable conditions now apparent in Europe and America are bong reflected in New Zealand. The export and import returns prove conclusively that iiie community lias profited by the temporary depression. Traders and producers have been forced to face the position, and their efforts have resulted «n the equilibrium being restored. The exports show a substantial surplus over •the imports, and, so far as we are concerned, that amounts to a favourable ibrade balance. This point 'may be emphasised by figures. The values of the exports and imports for the year tended 30th September, 1909, compared with the, figures for the two previous years, show as follow:— Year. £ £ Exports. Imports. 1906-7 *.< 19,891,846 16,071,887 1907-8 ... 16,870,587 17,750,868 1906-9 ... 18,700,156 14,916,005 (Note: These figures do not include . specie.) It will be seen from the figures I have quoted that, while in 1907-8 the import* exceeded the exporta by

£1,350,281, for t'ne year just ended the exports exceeded the imports by £3,784,151. We are in effect back to the position we were in in 1906-7, which was the year of our extreme prosperity. It is necessary for this oovuvtry to show a substantial excess of exporte orer imports, becauee we have w> meet annually a very large interest liability in connection with public and private indebtedness.' We have, it would seem, practically recovered the ground lost in 1907-8, and we may now reasonably anticipate a further forward movement. There are many factors that wartant this expectation, and it may be as well to make a brief reference to them. The prices obtained for the first of the new seasou'i, clip sold in Wellington and in other parts of the Dominion. as well as at the salee held in the chief centres of the Commonwealth, indicate very clearly that, at the moment, there is a strong demand lor this staple, as was anticipated by our London advices. Values realised at these sales were considerably in advance of those current a year ago, and latest. London cables show that the market presents features of great strength. On 24th Novemoer we received a cablegram from our London Office as follows :—The sales have opened with strong competition and large attendance of buyers. The marker is good, owing largely to shortness of supplies. Prices are id to id per io. higher.

Whether this firmness will be carried into the New Year is problematici!, for wool men are likely to be guided by their well-known maxim: "When is dear it is dangerous: when it ks very dear, it is very dangerous." Values are extremely high just now, and only twice in the last nineteen 3'ears have they been quite as high. There may be a reaction, but in any case it is very probable that higber prices than last season will be obtained. New Zealand will produce a larger clip this year, and, with the higher range of values, quite two millions sterJuig should be added to the income of the producers. The exports of both butter and cheese show very substantial increases in quantity, and as values are practically up to the level of last year, we are justified in anticipating a fairiy substantial increase in the income from this source. Roughly, this increase should represent £260,000. Mutton and lamb have recovered from the depression that, affected them in July and August, and although the market is showing signs of weakening from pressure of supplies, the Dominion should, with an increased output, be able to maintain its income from this branch of industry. There is some hope that developments in. the Chilled Beef trade, with the aid of the Linley process, will take place in. the near future. The success of the shipment by the Marathon from Queensland is very encouraging. Hemp has improved materially, the c.i.f. quotations for January-March shipments being well in advance of those ruling a year ago. Hemp is; in paint of fact, at a remunerative level, and most of the mills can be operated to pay. An expansion in the output of this produce is, I believe, one of the certainties of the season.

"Wheat and oats and other grain and pulse will again add materially to the volume of our exports; and, taking all the factors into consideration, I am of opinion that when the produce year ends on September 30th, 1910, the amount of our exports will establish a record in point of value.

The prospects before us are decidedly good, and. this Bank, with ite ramifications and close connection with the producers, muet necessarily benefit. I cannot, however, refrain from repeating a warning note: caution must continue to mark the policy of the trading .community, and the land speculators throughout the Dominion must endeavour to moderate their views on values. - New Zealand has greatly increased her obligations in recent years, and while she is well able to faithfully \ meet all engagemente, there is no reason, why the people should be handicapped in their work by ridiculously high lend; values. Caution should be the watchword of the people now and always.

Mr Martin Kennedy, -while congratulating the chairman on his address, took excerption to the policy of not declaring the < usual' bonus of 2} per cent. The fact of the dividend being confined to 5 per cent: might cause the shareholders to doubt the stability of the Bank.. So long as the Bank -was making profits equal to those of any bank in the Dominion, why should they not pay dividends equal to those of other ibanbs in New Zealand P There was some reason for building up a strong reserve, but the reserve wee alIready nearly 100 per' cent, of capital equal to any other bank in the Dominion. It -wee not quite so large as some banks Had, but their responsibilities were larger. Then there were the claims of shareholders that the money written off should be restored to them, and their claims would not be so chimerical if the constitution of the Bank were the same as that of other banks. There was no reason why they should not divide the dividend in volume. He was disappointed at the non-payment of the usual bonus. He had not gone back on his previous opinions on this matter. They could reasonably pay a bonus on the present occasion, and 2J per cent, on the next occasion. It. waa not impossible to ex,p©ct every year to be a record year. People thought that the State should I have o 'larger slice in the Bank than it bad. new got. Personally he would J not mind these expressions of opinion if they came from irresponsible persons, but these ofrinions had been openly expressed in Parliament. It was high time that the shareholders entered a protect against any action of the kind indicated, and they ought to ask the shareholders in London to combine with them in protesting. If the State had wanted it, they might have obtained double their present holding at the start. At that time the position was different. The shareholders now must resist to the last -any attempt on the part of the State -to take any more from the bank. If the State must take more, let it carry the case before the Arbitration Court and i pay the full earning power of the shares. Until that position was well defined, there would always-be uneasiness, not only among shareholders in the Dominion, but among those beyond the Dominion. The eooner the position was understood and affirmed, the sooner would the confidence of the Dominion be secured. In conclusion Mr Kennedy asked for a reasonable dividend —such a dividend as the shareholders would approve. Why should the shareholders not have such a dividend as they thought proper, provided nothing was done to destroy the stability of the Bank? Would any reasonable man say that with a reserve of £750,000 the payment of a 2J per cent, bonus would destroy the stability of the Bank? He would therefore support the declaration of the dividend, with the expression of a regret that a 2\ per cent, bonus was not adopted. The Chairman said the profits made during the first half of the present financial year—the six months ended 30th September, 1909—were large, but they were not so large as for the corresponding period last year. No difficulty was to be apprehended in making a substantial addition to the reserve fund at the end of the financial year, and in paying the same dividend and bonus as was paid last year. A bonus was rarely declared in any company for the first half year. He would support s larger bonus than 2$ per cent., but not until the reserve fund had reached one million sterling. Possibly, unlev this

was done and the. reserve built up rapidly, they might have to go to Parliament for authority to increase thcar capital. If they approached Parliament it would mean opening up the affairs of the Bank of New Zealand. If they could go along steadily piling up the reserve fund from year to year, he was hopeful they would be able to pay off the £3,000,000 due in 1914, and" abo to extend their operations without increasing thoJT capital, and thus have a large earning power on a small amount of capital. If they were paying 15, 1". or even 20 per cent., their shares would compare very favourably with those of other banks. In proportion to its capital, the trade of the Bank of New Zealand was larger than that of any other bank in Australasia. Again emphasising the desirableness of .strengthening the position of the Bank before coming into iine with the other banks in payment of dividends, Mr Beauchamp added that the Government had always exhibited a spirit of sweet reasonableness towards the Bank. Still, it would be well to obviate the necessity of going before Parliament for authority to increase the capital. Things were moving in an extremely satisfactory manner. He was hopeful, with their great earning power, that during the next six months they would be able to make up for the very slight falling off in the profits during the first half of their financial year.

There was no further discussion