BIG INCREASE IN BANK ADVANCES

Dominion, Volume 14, Issue 246, 12 July 1921, Page 8

BIG INCREASE IN BANK ADVANCES

DEPOSITS STILL FALLING OFF QUARTERLY FIGURES REFLECT FINANCIAL STRINGENCY Tiie banking averages for the June quarter demonstrate the fact that tiie monetary stringency still continues and is, if anything, worse than in the March quarter. The position disclosed by the latest returns may be summarised as under: — £ Government deposits, decreased., 180,629 Free deposits decreased 9,089,548 Fixed deposits increased 2,551 Advances increased' 17,092,338 Discounts increased 1,603,566 Circulation decreased 73,402 Coin and bullion decreased 62,270 Compared with the March' quarter, the fixed and free deposits have together shrunk by £1,6-14,635, while the advances and discounts have expanded by £1.939,144. Taking the three classes of deposits, we get the following:—

There is h very substantial decline in the volume of’the free deposits, and the same feature was noted in the quarterly returns for March. The free deposits or current account balances decreased in all six banks as shown in the table appended:—

The contraction is almost 25 per cent., and is an indication of the times. The fixed deposits exhibit lhe small and insignificant gain of £2551, the figures of the several banks showing as

Four banks show increases, and of these tin National Bank exhibits the largest volume of gain. The fixed and the free deposits for the June quarter of each of seven years are given below: —

The accumulation of deposits reached its zenith in June of last year, and the contraction which showed itself in the September quarter has continued since. The advances as already shown increased by the substantial sum of £17,992,333, or more than 50 per cent, as compared with the June quarter of 1920. The detailed figures are as under:—

The Bank of New Zealand and the National Bank show increases of about 60 per cent. The discounts have more than doubled, having gone up from £1,332,393 to £2,935,959. The movements as they sr'eet the several banks compare as under:—

The totals of the advances and discounts for the June quarter of each of seven years show as under: — Juno Advances. Discounts.' Totals, quarter. £ • £ H

The aggregate this year is mora ti an double the totals of 1915 and 1916, and nearly double that of 1917. Taking the fixed and free deposits together, and the advances and discounts, the. relation of the one to the other for a series of year’s is shown in the table appended: — Excess of

The violent change that has occurred in the twelve months is shown by tho conversion of a very large excess of deposits into a pronounced excess of advances over deposits. The note circulation and the metal reserve exhibit small shrinkages, the former being less by £73,402, and the coin and bullion by £62,270. The figures for a series of years compare as under: —

The shrinkage in the note circulation is significant, and although tho decrease is snwil it indicates a slackening of trade. Although the metal reserve is nominally smaller than tho note circulation, it 1b not really so, for the legal tender notes held by the banks and aggregating £971,905 must be deducted from the circulation, which would bring the latter to about equal to the metal holding. Viewing tiie position as a whole, it is very much what it was three months ago, if anything it is slightly worse now. If tho adverse movement can be a) rested now there would not be much reason for worry, but the difficulty is to ki ow whether we have reached the end of the do w n wai’d movement.

June,1920. June, 1921. Deposits. & £ £ Govt 8,379,164 8.188,535 190,629 dec. Free 38,354,181 29.264,633 9,089,548 dec. Fixed 16,243,911 16,246,462 2,551 inc. 62,977,256 53,699,630 9,277,626 doo.

June, 1920. June, 1921. Decrease. X* £ £ Now Zealand ... 17.62t.695 13,753.391 3.868 305 4.868.074 3.393.731 1,474.343 N.S. Wales 4.740.988 3.386.573 1,354,415 Australasia 4,881.130 3.005,731 1,275.399 6,012.527 5,049,165 963,362 Commercial 829.766 676,042 153.724 38.354,181 29.264,633 9,089,548

under: — June. 1920. June, 1921. Bank. £ New Zealand 8,302.143 £ 7.991.500 45 310,635 dec. Union ... 1.756.9.32 1.739,351 2.369 inc. N.S. Wales .. 2.5-16.167 2.503.125 43.042 dec. Australasia ... 1.105.102 1,131,573 26.471 inc. National ... .. 2,367.026 2.650.611 262,985 inc. Commercial ... 185,891 250,294 64,403 inc. 16,243,911 16,246,462 2,551 inc.

Filed Free Juno deposits. deposits. Totals. quarter. 1915 £ . 11,206,777 £ 17.43fr.379 28.645,156 1915 . 1?< 619.141 20,542,749 33.161,839 1917 . 13,819.104 23,380.996 37.200,180 1918 . 13.929.450 22,110,628 36.040,073 1919 . 14,753,346 28.252.583 43.CC6.929 1920 . 16.243.911 38,354.181 54.598.C02 1921 . 16/246,462 29,264,633 45,511,095

June. 1920. June. 1921. ncrease. £ Bunk. £ £ New Zealand. 15.550,945 23.B76.C47 8,525.102 Union 4.569.856 6.647,405 2,077.549 N.S. Wales 3.867.100 5.725.008 i.857.903 Australasia 4,058,441 5.732,322 1.663,881 National 5,113.475 8,674,532 3,561,057 Commercial .... . 487,571 794,212 306.841 35,457,188 51.449,526 17,992.338

June. 1920. June, 1921. Increase. £ £ £ New Zealand ... 824,018 2,041,9'5 112,444 1,217,89? 44.898 67,546 N.S. Wale, 64,252 219,579 155,327 Australasia, 156,614 197.818 41.20-4 National ... 192,204 311.325 119,121 Commercial 50,407 52,878 2,471 1,332,395 2,935,959 1,603,566

1915 21,982.147 1,441,430 23.423,577 1916 22.915,622 1.352,713 ■ 24.268.340 1917 26.8C4.616 1.470,687 28.289..3C3 1918 31.563,.507 1,244,494 32.807,801 1919 30,887.729 1,522,978 32.410.707 1920 33.457,188 1.332.393 54,789.581 1921 51,449.526 2,935,959 54,385,485

June quarter. 1915 Deposits. £ 28,645,156 Advances £ 23,423.577 deposits. £ 5.221,579 1916 33.161,889 24.268,340 8.893.549 1917 37,200.180 28,290,303 8.919,877 1918 36.040.078 32,807,801 3.232.2/7 1919 43,005,929 32,410,707 10,592.22? 1920 54,598.092 34,789,581 19,808.511 1921 .... 45,511,095 54,385.485 *8,874,399 ♦Excess of advances.

Coin and June Circulation. bullion. quarter. 1915 £ 2.824,992 £ 6.750.140 1916 3.918,536 7,268,432 1917 ......... 4,890,803 8,355,526 1918 ....... 6,154,495 8,089,636 1919 7,226.530 ( 8,024,147 1920 7,926,474 7.740,848 1921 7,853,073 7,678,578