COMMERCIAL B.N.Z. profit falls 8.2 per cent

Press, Volume CXV, Issue 33934, 29 August 1975, Page 13

COMMERCIAL B.N.Z. profit falls 8.2 per cent

The group net profit of the Bank of New Zealand. Ltd, fell 8.2 per cent to .$6,786,000 in the year to March 31. The figure for last year was 57.389.000.

Profit for the first half of the financial year was higher than that for the corresponding period of the pre-' vious year, but the results 1 for the second half were much less favourable. Rising costs and a slower rate of business growth are likely! to affect profitability also in 1 the current financial year. This was disclosed in the! annual report of the bank,: of New Zealand tabled in Parliament yesterday. The bank reported that in March! 1975. its lending averaged $645m. an increase of s6Bm during the! year. But’ the rise in the average had been sl99m the previous year. Liquidity pressure Total lending to the farm sector of the economy grew: -only marginally, but lending! to stpck firms rose’ significantly. The fall in meat and wool prices re- - suited in lower demand for bank accommodation from meat companies and wool buyers. The report said the slackening in demand from farmers reflected a drop in farm

investment because of a serious reduction in farm incomes. i “With liquidity pressures increasing through most of i 1974 the demand for bank: ; accommodation from the] non-farm sector remained! strong. “Retailers, wholesalers,, and manufacturers in par-j ! ticular required finance to I pay for a substantial build- ! up in the volume and value: I of stocks. Housing loans “However, because of the restrictions of official policy! -and the bank’s own liquidity! position, bank lending to the | non-farm sector grew more! slowly than in the previous! I year.” The report said the bank’s) (savings bank was able toj iincrease its lending, mainly! ; for housing. significantly [ [during the year as a result! i of successful competition for ! deposits and an easing in I government stock in-! vestment requirements.. The overseas operations of [ the bank’s branches in the, -United Kingdom, Australia; and Fiji have not only pro- - ! vided services for New Zea-: : land based customers but! i have maintained an active; and growing domestic busi-j ness in those areas, thus! contributing to New Zealand’s “invisible” overseas! \ exchange receipts. Uncertain future Overseas or “off-shore” [ finance in a variety of forms! was'arranged for corporatecustomers through the[ bank’s active and direct involvement in the Euro-cur-1 rency and Asian currency! markets. Some of these i transactions were of consid-l-erable magnitude by New Zealand standards.

In concluding the report the chairman (Mr L. N. Ross) said "The rapidly changing business and economic conditions, accompanied by some uncertainty ;as to the immediate future arising mainly from a widespread deterioration of the international trading situ--ation, has made this past year a particularly challeng- ! ing one. The Board is convinced that the country will respond to the challenges now confronting it and ! accordingly views the longterm future with confidence. “The B.N.Z. Group has i significantly strengthened its position during the year and iis well placed and well equipped to exercise a useful and constructive influence in the many areas of its operations.” Mr Ross said.