BANKING FIGURES

Dominion, Volume 21, Issue 87, 11 January 1928, Page 10

BANKING FIGURES

RETURNS FOR DECEMBER QUARTER DECREASED SPENDING POWER IN SECOND HALF FIXED DEPOSITS EXPAND The banking figures for the December quarter of 1927 indicate the reasons for the unemployment that has existed. There has been a sharp contraction in the spending power ol the people, for the free deposits and the note circulation in the December quarter averaged 990,958 as compared with £31,328,204 in the June quarter, a shrinkage of £3,337,300. On the other hand, the fixed deposits.have increased, and compared with a year ago the bank advances have contracted. Below is a detailed analysis of the returns. The returns of the six trading banks for the closing quarter of 1927 disclose one satisfactory feature as compared with the corresponding quarter of 1926, and that is that there is a substantial increase in the fixed deposits. Government deposits and free deposits have contracted, and so have advances, discounts, and note circulation. Taking the three classes 6f deposits and comparing the figures with the December quarter of 1926, the movements are shown in the table appended Dec., 1926. Dec., 1927.

The free deposits decreased by £1,710,206, and Government deposits by £608,215, but owing to the heavy increase of £3,174,613 in the fixed deposits, the total deposits at £47,475,991 show an increase of £856,192. At the March quarter the fixed deposits amounted to £21,088,034. In May the banks raised their rate for deposits by 10s. per cent.; in the June quarter the fixed deposits increased to £21,749,104, in the September quarter was a further advance to £23,308,246,. and m the quarter just ended the fixed deposits .at £24,280,160 showed a further increase. The banks apparently ' did the right thing to attract fixed deposits, and the movements in these show that all the banks were favoured with increases. The figures are as under Dec.. 1920. Dec.. 1927. Inc.

21,105,547 24,280,160 3,174,013 The free deposits or current account balances contracted by £1,710,206 as compared with a year ago,, but under this heading also the increase in the overdraft rate has had its effect as well as the increase in the rate for deposits. In March last year the free deposits totalled £24,440,778, in the June quarter there was a slight increase to £24,741,262, but in the September quarter there was a sharp contraction to £21,815,504, and in the last quarter there was a further shrinkage to £21,420,897. It will be seen that in the second half of last year there was a marked shrinkage in spending’ power, which in some measure accounts for the unemployment. Except for a small increase shown by the Commercial Bankali the institutions showed decreases. The figures compared with a year ago are as under:—

‘Decrease, flncrease. Taking the December quarter of a series of years the free and fixed deposits show as follow:— Dee. Free Fixed Total

In the five years the free deposits are at their k-west, while the fixed deposits are at their highest. ,XJie advances compared with a year ago exhibit a decrease of £1,308,651, in which all the banks shared except the Bank of Australasia, which shows a small increase of £41,505. The com-

•Decrease. -(lncrease. In the March quarter of last year the advances and discounts combined aggregated £50,800,808, in the June quarter they amounted to £50,753,106, in the September quarter to £48,815,231, and in the December quarter to £48,087,788, so that in the last quarter of last year there was a substantial contraction, the total of the discounts being £1,671,876. The falling off occurred in the second Half of the year, or when the higher overdraft rate took effect. The contraction in imports, relieved the banks of finding accommodation, and it seems that there must be a further shrinkage in imports. Taking the past five quarters the excess of advances and discounts combined is still very marked over free and fixed deposits, and the

The December quarter shows an increase on the September quarter, but the accommodation provided by the banks is very much less than in the December quarter of 1926. There is a contraction in the note circulation, but there is a small increase in the amount of the coin and bullion. The figures for the December quarter of each of five years show as under:—

quarter cf the past year as shown by the free deposits and note circulation is as follows: —

contracted during the second half of the year,, and at the December quarter it was £3,337,306 less than in the June quarter, which is not very satisfactory.

Deposits. £ Government 2,383,149 Free 23,131.103 Fixed .. 21,105,547 £ 1,774,934 21,420,897 24,280,100 £ 608,215* . 1,710,206* 3,174,0137 40,019,709 •Decrease. 47,475,091 tlncrease. 850,1927

Banks. £ £ £ New Zealand 10,854,208 1 .2,144,068 1,289,860 Union . 2,375,487 3,695,589 320,102 N.S. Wales . .. 2,754,073 3,183,115 420,042 Australasia . 1,704,644 2,024,066 319,422 National .. 3,044,27(1 3,748,844 704,568 Commercial .. 372.859 484.474 111.615

MoveDec., 1926. Dec., 1927. ment. Banks. £ £ £ New Zealand 10,813,MG 9,980,378 832,818* Union .... . 2,072,047 2,347,788 324,259* N.S. Wales . . ’,366,023 2,190,398 175,025* ’Australasia . 2,130,751 2.000,628 124,123* National ... . 4,108,661 3,922,297 276,364* Commercial . 950,425 973,408 22,9831 23,131,103 21,420,897 1,710,200*

quarter. deposits. deposits. deposits. £ . £ V 1923 .... 24,261,042 • 18,569,165 42,830,177 1924 .... . 24,776,888 19,899,611 44,676,409 1925 .... . 2o,189,5u3 20,840,809 46,030,302 1920 .... . 23,131,103 21,105,547 44,236,650 1927 .... . 21,420,897 24,280,160 45,701,057

parison is as follows:— Movement. Dee., 1920. Dec., 1927. Banks. £ £ £ New Zealand 21,720,724 21.253,281 467,463* Union , 6,206,031 5,081,549 585,082* N.S. Wales . . 0,329,074 6.260,483 62,591* Australasia . 5082,884 5,124,389 41,505f National . 8,046,036 8,400,731 185,303* Commercial . 1,351,090 1,301,352 49,738* 49390,439 48,087,788 1,308,051*

figures are as under:— Deposits. Excess ot Advances, advances. Quarter. £ £ £ Dec., 1020 .44,230,050 51,273,211 7,035,501 Mar., 1027 . 45.528,812 50.800,S08 5,271.990 June, 1927 Sept., 1927 . 40,490,300 50,753,100 4,202,740 . 45.213,750 48,815.231 3,001,481 Dec., 1927 . 45,701,057 49,759,004 4,058,007

Coin December Circulation. and bullion. quarter. £ £ 1923 .... . fl.fi-13.999 7,8fi7,841 1924 .... . 0,749,595 7.722.470 1923 .... . 0.947.077 7.740,219 192ft .... . 0.757,707 . 0,570,001 7.809,984 1927 .... 7,800,375 The purchasing power during each

Free deposits. Circulation. Total. Quarter. £ £ £ Mar., 1927 . 24.440,778 0.003,081 31,044,459 June, 1927 . 24,741,202 0,587.002 0.279,329 31,328,204 Sent., 1927 . 21,815,504 28,094,831 Dec.. 1927 . 21,420,897 0,570,001 27,990,958 The spending power of the community