Wales record helped by higher investments

Press, 4 January 1980, Page 13

Wales record helped by higher investments

NZPA Sydney The Bank of New South Wales, Ltd, group net profit of sAustlO6.BM, for the first time more than SIOOM in its 162-year history, is attributed to four main reasons by the directors in the annual report on the year to September 30. They attributed the increased profit mainly to: The bank’s increased shareholding in Australian Guarantee Corporation, Ltd, Australia’s biggest finance company, which now is 76.7 per cent Bank N.S.W.-owned (previously 53.2 per cent). Good increases in deposits in , both the trading and savings banks. Improvement in net interest margins. Placement of a higher proportion of savings bank deposits into personal lending for housing. In New Zealand, the Wales’ net profit from trading banks showed a “satisfactory” increase of 32.3 per cent to $4.4M. Net profit from savings banks rose 77.5 per cent to $700,000. A.G.C.’s contribution to the last year’s profit amounted to $40.9M, compared with $23.7M. The report showed that the bank’s total assets at September 30 were up 14 per cent at $14,600M. Public borrowings of subsidiaries, mainly A.G.C., were 13.5 per cent higher at S2.IM. During the year, the bank had to meet a rundown in total liquidity of almost S7OOM from the peak in early March to the low point in August.

As previously announced the trading bank’s profit rose 24.5 per cent to $41.3M. Savings bank’s profits rose 32.0 per cent to $23.2M, while those from other subsidiaries were steady at SI.4M. The Wales’ consolidated deposits and bills payable increased from $9275M to $10,573M. Advances and other lending went up from S7BBBM to $9175M.

Trading bank deposits in

Australia averaged $4845M for the year, an increase of $494M or 11.4 per cent on the previous year’s average. Average advances increased S4IBM, or 12.8 per cent, to 53682M,' indicating the strong demand for bank loans. Savings bank customers’ deposits rose S24IM, or 9.4 per cent, to $2809M. Growth in deposits suffered from continuing strong competition from building societies, and credit unions, the report said. The savings bank approved S4O6M for housing loans to individuals, S6M to terminating building societies, and SB9M for local government and semi-government authorities, an average of S2M every working day.

Since September there had been a limited recovery in liquidity, but “the daily surges have become even more pronounced and the period right through to the end of September was a difficult one for funds management,” the report said. The .bank said that more and more corporate borrowing needs were being met by merchant banks and other financial intermediaries outside the banking system. “In consequence the velocity of circulation of money has accelerated, and greater use has been made of standb}’ facilities and unutilised overdrafts to provide ‘overnight’ funding of this sizeable market. “Taken in conjunction with the size of government

transactions, the daily surges either way in the banx’s liquidity can be well over SIOOM, or over 2 per cent of deposits,” the report said. Much of this “bumpiness” was evened out by overnight interbank loans, but “the unpredictable and large size i of daily settlements relating to government business activities with the Reserve Bank contribute to these difficulties.” The report said that for this reason the bank has argued before the Campbell Inquiry into the Australian financial system for government accounts to be conducted with trading banks, and for the Reserve Bank to be a party to the interbank borrowing arrangements.