Tax payments drain bank liquidity

Press, Volume CXIV, Issue 33516, 23 April 1974, Page 18

Tax payments drain bank liquidity

During March, the trading banks’ liquid assets were reduced by $355m (39 per cent), mainly because of the seasonal payments of income tax to the Government, the New Zealand Bankers Association said in its monthly statement.

Despite subsisting companies having already paid part of their assessed tax ’last November, instead of March, the rundown in trading bank liquid assets was s7om greater this year than last year. ■ Some tax assessments were due for payment on l March 28, the day after the ; banks reported their assets !and liabilities. Hence, a further reduction in liquid .assets is expected in April. ■Early reports for the week |to April 3 show that lending increased during that week by s42m. During March, the increase in advances and the decline in deposits were equal at $162m.l This may be some reflection of the present tight credit squeeze, I Month of March 1970 Sm i Deposits down 118 Advances up 106 Total Change 224

I-!for in each of the last three d'years the increase in x advances was greater than if,the decrease in deposits. I* Unexercised authorities at' s the end of March were only 11 28 per cent of total limits.; compared with 33 per cent! s last year. Because of this, and the , continuing tax payments, the ? trading banks expect that j lending conditions in April I will be more difficult than Tthey were in March. g| The reduction in deposits; k(at the trading banks’ savings banks was also greater this -IMarch than it has been in e’recent years. In March 1974 e the reduction was sl4m, ; yicompared with S4m (1973), e S7m (1972), s9m (1971), and ;,,s3m (1970).

1971 1972 .1973 1974 Sm $m 80 101 128 162 J 34 124 142 162 —— .. IM. 214 22a 270 324