Tax affects deposits

Press, 13 May 1981, Page 23

Tax affects deposits

PA Wellington As is normal, the tax flow to Government in March caused a sharp fall in trading bank deposits and an equally sharp rise in lending, the New Zealand Bankers’ Association has announced.

Between February and March this year total trading bank deposits fell $46 million compared with a fall of S39OM at the same time last vear.

Although statistics on the tax flow to Government are not yet to hand it appeared that the tax take had not been as great as was expected. the association said. During March the underlying trend in trading bank deposits moved upwards, with the average growth rate reaching 14 per cent, sub-

stantially ahead of the 11 per cent annual growth registered in February.

“Given the recent moves

bv the Government to boost liquidity in the financial system, it now seems clear that the cyclical decline in trading bank deposit growth bot-tomed-out during February.” During March the annual growth in trading bank lending reached 18 per cent maintaining the upward trend begun some months ago. As a consequence, the

lending to deposit ratio had been kept at a relatively high level in the last few months.

In the private savings banks, deposits had continued to grow slowly, although in March the annual growth rate edged up to 8 per cent from 7.5 per cent recorded in February, the association said.