Little call for optimism- National Bank

Press, 13 April 1988, Page 35

Little call for optimismNational Bank

PA Wellington There is little reason to be optimistic 'about the; business environment. in| 1988, says the National Bank’s annual.report. j “With the exception of emerging industries such as tourism, horticulture and financial, services, little growth is forecast.” the chairman, Mr David Tudhope, says ■in his review of the year ended December 31, 1987. In 1987 “only a few economic indicators showed positive signs, and by year’s end Iwe . had witnessed a year' of nil growth,” he says. While inflation, interest rates and the exchange rate trended downwards, it was unclear whether this was a result of the world sharemarket crash or a consequence of Government policies over the past three years, the chief executive, Mr Jim Macaulay, says.

But the reductions in both the external and Government budget deficits were the result of Government policy.

“It is therefore particularly worrying that since the sharemarket collapse, the pressure on Government to deviate from 1 its policy stance ( has been mounting,” he Isays. I' !

“With sd I much achieved in such! a short time, the task (for the Government is to resist short-term calls (for Ireregulation of I the economy. To accede (to them would jeopardise Ithe very real gains made (so far.” But in spite of country’s economic problems, the National! Bank (still managed a 29 per cent increase in after-tax profit to $lOl million. I j Last year was the first year in which banks Jelt the impact of competition

(with 10 applicants, receiving banking registration (under the Reserve Bank ! Amendment Act. .

“But the cost of estab-"' (lishing full retail services I coupled with the, size of (the domestic market will ! inevitably | restrict the ( number of participants.” i Mr Macaulay says.

, South Pacific Merchant I Finance became a wholly I owned subsidiary during ! the year,‘adding a mer- | chant banking arm to the I National Bank’s tradiI tional retail strength. 1 Southpac recorded an ! after-tax ' profit of $2O million in 1987, representing a return ,on average shareholders:funds of 32 per cent.

The merchant bank’s 15 advisory staff earned record fee income for the bank during the year and were heavily involved in the setting up of the State Owned Enterprises. The bank is building up a close relationship with State Owned Enterprises which win have considerable funding needs in both the short 'and long term.

A new ■ UMantec” foreign exchange dealing system was installed as part of the bank’s policy of setting up a full treasury facility. A corporate: overdraft rate was introduced and overdraft facilities extended to both onshore and offshore sources.

One of the products which has shown good growth has been overseas currency accounts held in Wellington for importing and exporting! customers, Mr Macaulay says. But retail landing and deposit taking still provide the basis of Ithe bank’s business with 144 branches and 3700 staff nationwide.

The National Bank is a wholly owned subsidiary of U.K. trading bank, Lloyds Bank, Pic.