FINANCE AND COMMERCE.

Press, Volume LXVI, Issue 20056, 11 October 1930, Page 14

FINANCE AND COMMERCE.

BANK RETURNS.

SEPTEMBER QUARTER. CURRENT CONDITIONS REFLECTED. |IHE PBESS Special Serrice.3 WELLINGTON, October 10. The returns of the six trading banks in the Dominion for the September quarter reflect the adverse economic conditions prevailing. The demand and time deposits in the aggregate show a shrinkage of 2,018,187 compared with the corresponding quarter of last year, while the advances and discou .ts combined have increased by £2,968,909, and there is a shrinkage in the note circulation of nearly £.200,000 which is an indication that purchasing power has contracted. The three classes of deposits compare as under: — Sept. 1929. Sept., 1930. Deposits. £ £ Government 2,799,140 3,600,100 Demand .. 23,968,295 20,805,171 Time .. 30,600,331 31,747,268 Total -. 57,367,766 56,150,539 Deposits. There is an increase of £800,960 in Government deposits, and an increase of <61,146,937 in the time deposits, but tlia demand deposits, which are important as representing spending power, have contracted by £3,165,124. All the bank* show shrinkages in their holdingß of demand deposits as will be seen by th* table appended. Sept. 1929. 6'ept., 1930. Decrease. Bank. £ £ £ X«W Zealand 11,284,524 9,669,786 1,614,738 Union 2,642,046 2,410,896 231,160 X.S.W. 2,598,544 2,226,859 371,685 Australasia 2,313,767 2,091,145 222,622 National 4,121,387 3,442,224 67D,16;s Commercial 1,008,027 962,261 45,766 Totals 25,968,295 20,808,171 8,165,124 The shrinkage shown by the Bank of New Zealand is more than half of the total, but it mnst be remembered that this bank does probably more than half of the banking business of the Dominion. The time or fixed deposits have inareaaed by £1,146,937, the figures of the several banks showing as under:— Sept., 1929. Sept., 1980. Increase. Sank. £ £ ; £ Z'land 15,324,528 15,704,365 479,837 Union 8,286,103 £.534,081 247,978 ST.B.W. 4,072,196 4,088,366 16,170 •Australasia 2,822,955 2,844,865 21,910 National 4,518,422 4,922,955 404,633 OoaaMMreial 676,127 652,636 *28,491 Totals 80,600,831 81,747,268 1,146,937 SDeaotet decrease. t The demand and time deposits together show a contraction of over «8.000,000, but the aggregate is larger < than it was at the .September quarter of 1926 and 1927, and this is shown in the table following:— Sept. Ptm Fixed ' Qtr. deposits. depatita. Totals. * £ . St 19SS 24.907,961 21,074,893 45,982,8531937 21,815,504 23,898,240 45,213,750 1038 23,344,954 29,251.064 52,596,018 182# 33.988,295 " 80,600,331 '54,558,62S l»SO 20.803.17 X 31,747,268 52.550.439 Xt will be noted that while the time deposits have expanded steadily year the free deposits have fluctuated considerably, and the aggregate for the past quarter is the lowest in the five years, and the significance of this should not be overlooked. Advances. While the deposits Jiave contracted, the borrowings from the bankß as represented by advances and discounts show a very sabstantial expansion. The movements in the advances as they affect each bank are as follows: Baak. B«9fc, 1939.. Sept„ 1980. j W.Z. 20,738,919 38,167,789 t2.428.870 ' Union 6,762,166 6,879,935 f117,769 H.S.VT. ,6,604,572 +701.161 ! A'lasia 4,675,48 a 4,807,499 {167,933 National 9,519,940 9,802,855 $217,585 Oaaaawelal 1.648.738 Total 46.643,604 51,309,840 t2,856,236 tlncrease. (Decrease. Three. of the banka show increases •mounting in the aggregate, to £3,247,800, while the other three ahow . &s aggregate contraction of £391,664. The heavzest strain has .fallen upon the Bank ot New Zealand, for more than ■ two-thiarda of the' increase has been found by that institution. The discounts tor the quarter total' £1407*061, aa compared with £994,388 in the corresponding quarter of last an Increase of £112,673. The advances 'and discounts combined very nearly equal the tred and free deposits combined, and from a banking point of view this is not desirable. Comparing these items for the September quarters of five years, the position is as under:— Excess of Deposits. Advances. Deposits. 1926 1927 45,213,750 48,815,231 *3,601,481 1928 52,506,018 45,119,424' 7,476,694 1929 04,588,626 49,537,992 6,030,634 1980 52,560,489 52,506,901 43,538 * Exeee# of advances. 4 Battonisf of Advances. For the past four years there has been a substantial excess of deposits each year, and the l banking position was easy; that is to say, the banks were in possession of ample funds for meeting any demands for accommodation that ■ may have been made on them, but now the very limit appears to have been reached. The banks can lend no more than they ean borrow, in fact not nearly ao much. If anyone in the deposit banking system can be called a ereator pf credit it is the depositor, for the banks are strictly limited in their lending operations by the amount which the depositors l think fit to leave with them. The banks must now either raise the rate on overdrafts or pursub a system of rationing advances, and it is most likely that they will adopt the latter course. There is „also the exchange on London, which has undergone another ehange since the banks in the Commonwealth have advanced tie rates. It is understood that the Associated Banks will be issuing a manifesto explaining the present position and probably announcing rationing of both exchange and advances. Cfoin and Bullion. The movements in the note circulation and coin and bullion show as under;— < Coin and . September Circulation. Bullion. Quarter. £ £ 1088 .. 6,485,438 7,792,229 1927 .. 6,279,329 7,873,626 1928 .. 6,166,287 7,350,045 1929 .. 6,272,353 7,109,873 1830 ... 6,039,175 6,838,877 The community must, it se-ms, exDect aoma, banking stringency, but the NHMk H B *' **• not likely to be harsh or unsympathetic. HH SILVER. ■B| toxmn omcui wxbxmisb.) |HB QUoelved October 10th, 5.5 p.m.) HH _ RUGBY, October 9. ■■■l .<<ootaboos for 'ailxer are :—Spot. 16 9-16 d tewasd, 14 B-iM ftm mum.