BANK OF AUSTRALASIA.

Press, Volume XLVIII, Issue 14349, 8 May 1912, Page 10

BANK OF AUSTRALASIA.

SATISFACTORY; HALF-YEAR:; (FROM OTTR, OWN CORBK3POXDENT.) LONDON, March 29. . Mr O G. Hamilton, presiding at tho soventy-iighth annual general meeting of the Bank of Australasia, told.the shareholders that Now Zealand had had a prosperous season, .but not quite so prosperous as tho preceding one. The prosperity of.'Nevy- Zealand .and -Australia was reflected in the Bank's balance-sheet. Tho net profits were £205,888 for the half-year, aftor providing for bad and doubtful debts.and allowing a bonus of 10 per cent. ;tq tho staff. So satisfactory was the position at present that, tho directors wero able to recommend an increased dividend of 14 per cent., together with a bonus, of 3 per cent., making a total distribution of--17 per cent., or £3 8s per sliaro, £50,000 was added to the rcsorvo fund, £20,000 had been placed to writing down of premises. A very largo proportion of iJio Bank*, resources was in ready money, earning no interest at all; in bullion, coin and Commonwealth notes tho holding was over £5,178,000. That was" uo temporary figure swollen for the purpose of what was known as window-dressing; that was not possible in Australia, for all Banks had to make sworn quarterly returns of their average weekly holdings of coin and notes. The September returns showed that the averago weekly holding of all Banks was about 25 per cent, of their liabilities. At that time the Bank of Australasia's holding of coin and notes was over 30 per cent. of.their liabilities. This huge holding of coin was a feature of great strength because thereby the interests of creditors wcro amply safeguarded. At first., sight, perhaps, one wondered how a Bank which had to keep perrmancntly bo many millions in ready money, earning nothing, could make the- profits their Bank did. Tho chiof explanation was that for many years the directors had been steadily reinvesting a large proportion of tho profits in tho business of the Bank. Past reports would show that in the last ten years £915,000 liad been added to tho reserve fund out of profits, and during the same period premises had been written down by £312,000. Thus £1,227,000 had born reinvested in tho Bank. That introduction of fresh capital had enabled the directors to lend out at a good rate of interest an equal amount of their deposits which would otherwise have had to bo kept in ready money, earning no interest at all, and thus it was directly, producing som« £62,000 a year, or getting on for 4 nor cent, of their capital. But for that introduction of nevr capital the present handsomo dividend and bonus would not now be paid. Ten years ngo the j dividend was 11 per cent., now it was 17 per cent.; ten years ago the market valuo of their- shares was 80. now it was nearinp; 120. In other words, while during the. last ten yt-ars they had provided-out_ of-profits £1,227.000 of new capital for. which they were getting £96,000 a year more- dividend, or nearly 8 per cent, on such fresli capital, tho market valuo of the shares had increased by over £1.500.000. These figures were proof that tho policy of reinvesting profits not only immensely increased tho credit of tho Bank in the eyes of tho-'public, but also had a material bearing on dividends and on the market value of j tho shares. . i —— ■ I

"""" " ' •f ow- onqnirios trero made as to tl» pUct, but there w»s no bidding, and the pro. > forty was passed In.