Bank lending increased

Press, 29 November 1977, Page 25

Bank lending increased

3 The growth of bank de--1 posits was relatively stronger t than in recent years, at S34M - in October, and was con- - centrated mainly in non- - interest-bearing deposits. This concentration repeated the r pattern of growth in October - 1976, but differed from the r two previous years, according to the monthly state- - ment of the New Zealand t Bankers’ Association. 1 Growth of deposits, at the end of October, for the last - four years was as follows: < Interest-bearing deposits — J 1974, $10M; 1975, $18M;; . 1976. S4M; 1977. S2M; nont interest-bearing deposits — 1974. nil; 1975. S6M; 1976, q$l4M; 1977. S32M. 1 j The change in emphasis i apparently comes from the} : I relaxation of interest rate J controls, and the patterns of "j reaction of banks and other I financial intermediaries after '■ tax payments in September. I Other payments to the State (may also be a factor. I In October some bank dej posit interest rates were (eased slightly while some I finance company rates were | raised. The financial statement ("mini-Budget”) at the end of October was made two days after the date of these statistics, and therefore did not influence them. Savings Bank deposits rose S6M during October, compared with S9M in 1976, SI2M in 1975, and SBM in [1974. Both savings deposits

and interest-bearing trading bank deposits are facing new competition from the inflation-adjusted bonds, but the effect of such competition cannot be assessed as yet. Lending increased almost S6OM, partly as a result of tax payments in September, and partly as a result of seasonal demands for funds. Some sectors related to farming were expected to have an 'unsually strong seasonal demand for funds.