Evening Post. MONDAY, JULY 4, 1898.

Evening Post, Volume LVI, Issue 3, 4 July 1898, Page 4

Evening Post. MONDAY, JULY 4, 1898.

THE BANK OF NEW ZEALAND. «. The balance-sheet of the Bank of New Zealand that was laid on the table of the House on Friday is still, in its results, far short of the promises made by Mr. Watson and the directors of the Bank in 1895. Mr. Watson estimated the additional earning power of the Bank at £138,750, and anticipated a still further increase after collection of the firat call on the contributory liability of shareholders. For the purpose of simplicity, w<* take the sum in round figures at £140,000. In the Banking Committee's import (1895) tbe estimate of the directors was stated at £135,000 — that is to say, after paying £80,000 for interest on inscribed stock. If Mr. Watson's estimate be taken with £14,000 written off as the estimated value of the inscription business in London, which did not follow .the Bank, there will still remain a large deficit on the estimated profits. It has to be noted that the estimate of £138,750 was the estimate of additional earning power at a time when the Bank, but 'for its connection with the Estates Companj r , would have been earning large sums of money. J ust here the aggregate of the directors' estimates for the three years that have elapsed may be compared with the actual results :—: — Directors' esthnate, j>135,000 for three years ... '. .£405,000 Actual profits 201,481 Deficit ... .£203,519 If any commercial house dealing with this Bank showed such business, what would be the result ? What, theu, should the country that guarantees this institution do under like circumstances H It is matter for very grave consideration.' Even discounting the inscription business, the deficit is more than disquieting, and seems to show that not only is the probability remote that the deficit iv the Estates Company vvill be made up when the Government guaranteed stock falls due, but it is doubtful if it will ever be made up. It cannot surely be said that this small profit has been caused by losses made since 1895, for £200,000 was set aside to meet existing debts that might prove irrecoverable. It will be remembered that under the adjustment of 1895 £1,350,000 was to be used as follows :—: — To write off bad debts .£376,000 For conting-ont bad debts ... 200,000 To write down estates, company's shares, <fco 773,100 .£1 ,349,100 - How, then, is the result as compared with the estimate to be explained ? When commercial men make an estimate that fails of realisation bankers usually conclude that those controlling the business are incompetent or that the business is bad and should be closed down. It is of interest to compare the balancesheet of 1897 with that of 1898. We place the figures in parallel columns : —

There are some features in these figures that do not look promising. First deposits have fallen £604,815 and bills payable £67,755. This apparently means that foreign exchanges have become restricted, if only to a small extent, but it is a most lucrative branch of banking business. It is not disclosed how interest aud non-interest paying deposits stand, but suoh information would be of servioe in obtaining an estimate of profit. What the Bank holds as securities, &c, will appear from the following comparison of assets for 1897 and 1898 : -

.613,436,101 .£12,725,999 *1897 — Colonial Govornmont securities, .£780.9'(8; Assets Board debentures, .£2,(380,285 ; Municipal securities, J515,5G7 ; other securities, JL'31,901. 1898 — Colonial Government securities, .£678.248 ; Assets Board debenture*, ; municipal securities, .619,453 ; other securities, .£31, 900. It will be noted that coin is diminished by £44,08O» The investments have been re-

dnced by the Assets Board debentures of £800,000 and about £400,000 of colonial Government securities, which it may be assumed tbe Bank lias sold on the London market. If it took them up at 3£ per cent, a profit was no doubt made on the transaction. The liquid assets have, however, by the decrease in coin, &c./ and Government securities been lessened by about £150,000. In the new balance-sheet there are instances where two entries appear where one was before. In the old balance - sheet bills receivable and bills discounted were put together; in the new there are two entries — Money at short call and bills receivable, £1,400,309, and bills discounted, £1,719,929. We notice that the landed property of the Bank is valued at about £11,000 less. Has any property been sold, or is that the new valuation under the Government Valuation Act? There are assets on the balance-sheet that may be challenged — for instance, the estimated value 61 the Colonial Bank property. Can it be said that it would fetch the value stated ? Then there is the goodwill (£75,000) of that defunct institution, which should have no place in the Bank's balance-sheet The debenture conversion account has been written off by about £10,000. 'It is, of course, out of place as assets. 'Again, is there any reasonable hope that the 1895 valuation of the B.N.Z. Estates Company, Limited, will be realised ? AVould it not be better to strive to reach the bed-rock of the values instead of holding on to | some part of the inflation of the past? J It is a di.«mal reflection that the hopes so confidently expressed in 1895 are still so far ! from realisation, and that apparently in the I near future something more must be done. Whether the State should extend its fostering care, or whether the institution should be sold, we do not propose at present to discuss ; but the fervent hopes expressed that the colony would lo3e nothing by the legislation of 1894-95 must now be seen to be illusory. Who are to blame ? That, as Kipling hath it, "is another story," and it yet remains to be written. I

ASSETS. 1897. 3oin & cash balanoes £1, 357,891 Uullion 132,<J50 Investments* ... 3,509,801 Uilh roooivablo and bills discounted ... 2,G'19,88J Dtlior advances and soonrities 4,509,895 First cull recoverable 4,141 Landed property and promises ... ... 442,851 B.N.Z. Estates Co., 1895 vuluation ... 580,005 B.N.Z. Kstatos Co., dobouturo oonversion account ... 08,415 Colonial Bank proporfcy 105,481 Colonial Bank goodwill 75,000 1898. #1,328,15? 117,70!2,609,88f 3,180,23E 4,281,318 1.55J] 431,831 540,44i< 58,312 101,532 75.00 C

JJI AJ} l.-UJ. X 1 JllQ • 389 V. Guaranteed stock ... .£2,000,000 Shares ... ... 744, 141 Reserve Fund ... 23,474 Notes 557,497 Bills payable ... 1.387.681 Deposits 8,230,935 Olhor liabilities ... 601,718 Bills rediscounted ... 50,4-15 Balance, profit & loss 39,391 1898. .£2,000.000 893,042 23,474 593,905 1,219,926 7,626,140 260,202 34,375 74,900 -£13,635,302 .£12,725,964