BANK OF NEW ZEALAND.

Evening Post, Volume LXVII, Issue 149, 24 June 1904, Page 5

BANK OF NEW ZEALAND.

ANNUAL MEETING OF SHAREJIOLDISHB. The annual meeting of the shareholders oP the Bank of New Zealand wns held thiti morning. Mr. F. de C Malet (Chairman) presided, and there was a binall atteiul.uice of&harelioldi'is. TIIK CHAIRMAN'S ADPRKSS. In moving tho adoption of the lepnrl und balance-sheet, the Chairman Mill: — "1 ant pleased lo bo able to place again before shnieholdcis bo a report and balance-sheet us that leeently didliibutud among you. It seems almost unncccssaiy for me to point to any improvement in particular, for an examination of tho bahince-whoet will s»how that very satisfactory progress has been made throughout. 1 propose on this occasion to lefer only to tho items in which there is a variation of a inoic than average character. " Under the head of capital an increase appears due to furlher small payments by some of the shareholders who ■weie in arrears, and to tho issue of prefeienue shares to an amount of £500,000 to thu Government in teinis of recent legislation. In notes in circulation there is an expansion by the hum of £93,229. Bil's payable aro always a varying quantity, which is largely affected by tho amount of paper issued to the Government for transmission to London to meet the indebtedness of the colony. TJie increase of about £500,000 at the present time has, therefore, little significance. Deposits ara less by £165,000.- At March, 1903', tho Government moneys on hand stood at a higher figuro than dt the saano date this year. Had the bal-ance-sheet given Government deposits and deposits of the public separately, an increase in the latter class of something like £150,000 would have been shown. In coin.", cash balances, and, bullion account a position of strength is maintained, while money at s-hoit call, Government securities and other securities in London, exhibit nn increase of £114,000. This sum is more than accounted for by the securities taken over from the Government in London on tho day of tho balance in payment of the preference shares issued on that date. The aggregate of th,OFe items is very large, consequent on the necessity of making provision for the repayment in July next of £1,000,000 guaranteed stock. The entire issue of the Assels Realisation Board debentures at 31st; March last aggregated £l,Boo|ooo. These debentures, as you aro aware, wore renewed for a further period of five years, such as were in the hands of tho public (£?ll,000) are being 'redeemed, and as soon as the balance of £71,700 has been paid, the Bank will then hold the entire is-Buo. Bills discounted and advances are over £500,000 higher than last year. Seeing that tire business undertaken has been of a thoroughly sound nature, and, as fur as tho directors ure ablo to judge, perfectly safe, the extension must be considered .satisfactory. Such of tlie assets in liquidation as were not transferred to tlie Assels Realisation Board, but which wero left to tho Bank to wind up when tho Bank of New Zealand Estates Company ceased operations, have been further reduced by £18,580 from realisations, apart from tho operations of tho East Coast Native Trust Lands Board, who havo effected sales representing a sum of, say, £36,340, of which, say, £12,000 has been up to dato received by tho Bank. Tho "Assets iv Liquidation " Account originally stood (in 1897) at £580,000, and now after deducting the sales made by tho East Coast Native Lands Board, will be fuither reduced to, say, £156,800. Two moro of the business promises taken over by tho Bank havo been disposed of during tho year, and a fuither appropriation (£2000) has been made for any deficiency that may arise. The premises which were taken over at £125,371 now stand at £8120. The directors hope to t,ee this account soon disappear from tho books. As the result of an expansion of business the charges have increased. Moreover, our business premises throughout the colony, many of whicli are of wood, require considerable attention from time to time. In addition to tho direct appropriations which have to ba made year by year, it must bo borne in mind that all repairs and renovations for the upkeep of the 131 branches and agencies uro a charga to this account. A larger Income involves heavier taxation, as, for instance, the rates and taxes havo increased during tho year irom £8700 to £10,400, and, further, the additional rate chargeable uudor the revised graduated land tax forms no inconsiderablo item. Again, apait from tho cost -of stationery and labour ii> tho issue of tho bank notes, a sum of £15,000 has been paid this year to tho State for stump duty. After making provision for tho customary items this year us las-t — viz., management, bad and doubtful debts, and donation to the Provident Fuud, and £80,000, the interest on the guaranteed stock (£2,000,000), tho balance of net profits for this year amounted to £251,182 9s lOd, us compared with £210,590 12s Id on the 31st March, 1903. You will at once eeo that tho Bank has experienced an exceptionally prosperous year, indeed, I might go further and say that the profits have been abnormal. At tho same time, let me add that tho result shown is not owing to any increased charges to, our customers), but rather to the fact that tho business under every head has been woll maintained. Exchange operations, through tho peculiar condition of the money market in America and England, havo been remunerative. Then, again, our strong position in London enabled us to take full advantage of the high rates ruling thoro for loans at short notice Before dealing with tho special charges this year on this account — viz., (a) Bonus to staff; (b) provision for depreciation of investment stock ; and (c) expenses of renewal of guaranteed stock, let mo first say that tho Bank has been forturevte (especially having regard to the large volume of business) in having to make a very small appropiiation on account of bad and doubttul debts. The bonus to the stall' I feol sure •will meet with your hearty approval. I may recall tho remarks inado at a mooting of. shareholders, two years back, by one of your number, who expressed the opinion that tho officials of the Bank descived the spocial thanks of the shareholders for the manner in which they had stuck to tho Bank in its dark days, and he hoped, as the opportunity occurred, their loyalty and good work would bo substantially recognised. Ib must not bo forgotten that some of tho staff years back had also the unpleasant experience extending over a few yeois of a 10 per cent, reduction on their salaries. Tho directors were, indeed, very pleased to sco their way to recognise the good work of the staff and the valuable assistance rendered by them to tho Board in tho discharge of their duties. Tho recognition was in a sense o\oulue, but it Mas not until now that tho circunisauces woro favourable and that tho directors were able to return to •tho staff a small proportion of that profit which their efficient services havo so materially contributed lo during tho period now under review. The piovision mado (£30,345) for depreciation of -investiffeivt stocks calls for rvfeioneo. I -\\ ill not "weary you with a disquisition on tho well-known reasons which havo led many similar institution!), both in these colonies nnd tho Mother Country, to make a provision of this nature. We should havo been minting in

out duty had we not done so. We have placed to one sido an amount (£30,346) equal to the diflierence between book viluii and the lowest market piice of such Mock at the dato of tho b<:lance-sheet. Prices have .since shown a. slight recovery, and in lime gill-edged securities now temporal ily depiessed tlirough many causes will, no doubt, regain tlioir founar position, when this t>um will Ijc fact free. We have appropriated a sum estimated aa suilrcient to meet the expense attendant upon the renewal of tho guaranteed stock in July next. Notwithblanding the foregoing appropriations we ar« still in a position to make- the statutory payment to the Assets Realisation Board of £50,000, to provide £21,281 for dividends, and to" pay over a sum of £129,022 towaidd providing against phiinkiigo in tha securities of the Assato Idealisation Board as against a payment of £124,410 last year, towards the same end. Before leaving this subject it will interest you to know that the Bank, after meeting all expenses, jrfiail have up to date out of profits paid to the Assets Realisation Board, and appropriated towards wiping out deficiencies and paper assets in the balance-sheet of the bank, a sum of no less than £1,181,805. This amount includes the figures in the balance-sheet now before us. I have much pleasure in again referring to the satisfactory increase in new business, which affords the best indication of the extended confidence in the bank. It is now provided that the election of the two directors by shareholders shall be carried out by voting-papers being sent to each individual shareholder, very much od tho same lines as mnny of you are used to in connection with voting for Directors of Life Insurance and other companies. We propose, therefore, to distribute with tho leport of these proceedings a copy of the bylaws as drafted for tho conduct of such elections made in terms of clause 20 (2) of the Bank of New Zealand Act 1903. Shareholders Wishing to stand for election must give notice to the Head Office of,the Bank not less than four calendar months before tho month in which the election* is to take place. As the election is held at tho half-yearly meeting in December, it would be necessary for any intending candidate id give notice before the end of July, wlien as soon as practicable thereafter, and not later than three weeks, the oflicer at head office required to conduct the election, shall forward to each shareholder a voting-paper to be returned to the head office not later than rive clear days before- tho month in which the election is to take 'piace, i.e., not later than the 24th November nest. The result of tho . elecion will then be announced tit tho December meeting. If shareholders iereceive no further notice they will understand that no election is necessary in tho event of but one candidate offering. The Bank of Now Zealand Act 1903, requires that not later than flic Ist January, 1904, and again between the months of October and "December in 1908, and also at such other times as the Board of Directot-a of tho Bank or the Colonial Treasurer thinks fit, tho Chief Auditor shall cause the properties vested in this Baord to be valued, and the actual de-» ficiency between such Value and tho amount of the outstanding debentures of that Board, with interest, to be ascertained. ' The following are the figures as supplied by tho General Manager of the Ass9ts Realisation Board, showing the valuations as on Ist January, 1904; —

The Debentures of the Assets Realisation Board outstanding on t4io Ist January, 1904, represented a sum of £1,920,000; therefore, after deducting the figures (£1,415,721) given in the valuation as on the Ist January, 1904, set out above, there remains the sum of £504,279 to be provided out of the profits of the Bank. I caused application to be made to the General Manager of tho Assets Realisation Board for the information given, in the following table, which has been supplied by him, and that, I think, will be of interest to you: —

You will observe from tho balancesheet now before you that it is proposed to hand over to the Assets Realisation Board £179,022, being Uio sUUutory paymont of £50,000 and £129,022, the balanco of the net profits of the Bank, thereby increasing rl\o figures £617,917, amount received by the Assets Realisation Board from the. Bank to 31st March last, to £796,939, and after payment of incomo tax (£3489), further "reducing the deficit as shown by the valuation of iha Assets Realisation Board from £504,279 to £328,746. Mr. Macintosh, as you will notice, is not. present' hero to-day. He is on leave of absence for a few months. His visit to London will enable him to mako J tho acquaintance of the London Board and staff. In his absence Mr. Michie, the manager of the brunch at Ihmedin, is discharging the duties of Geneial Manager. The Government has appointed Mr. William Callendev, Chief Auditor, in tho place of Mr. Macintosh (now General Manager) who hold that offico for some yeais. Mr. Callendcr was peniar Inspector of this Bank when ho accepted the post which he now fills, and had been iv the service of this institution for a pcaod of over thirty years. Mr. Martin Kennedy, one of tho directors elected by the shareholders, is also on a visit to the Mother Country. During his stay in London he will be associates with the London Board, and attendance at their meetings cannot bo otherwise than of great uso, not only to tho diteetor, but subsequently also to his colleagues and the officials at head office on his return to the colony. 1 havo much pleasure^ in acknowledging tho ready assistance and support my brother directors have'always given to me in carrying on my work as Chairman of this Board. I desire also on behalf of my fellow-directors and myself to again refer to nnd thank tho General Manager and the staff for the services rendered by them to the Bank. The results shown in the profit and loss account lcava no room for doubt that the position fully warrants the payment of the maximum dividend authorised by legislation—s per centum per annum. If

you see fit to adopt tie recouunendaiiorc of the directors a dividend at that iaiA for the twelve inontks ended the 3lsfe March Jaht "will Lo payable at the head office ou Monday next, and at tlifr brances upon tlie" receipt of advice. 1 now move the adoption of tlie report and balance-sheet. A DIRECTOR'S REMARKS. Mr. Watf-on, in seconding Hie adoption of the leporo and balance-sheet, saM: — It has become the time-honoured custom at our annual genet al meetings foi tho dhector appointed X v (^ 6 *>uareholders> who is the next to retire, t*> fecond thu adoption of the report and l-alance-sheetj to place beiore the shareholdeis his viewtt legaixhng the position and prospects oi 1 tho Bank and the Assets Board, and to state hia iutenlion as to standing foi 1 lc-elcctiou. This year it is my turn, and I have th.c pleasant duty of seconding the adoption of a very favourably report and balance-pheet. The Chairman, hah gone so fully into the various items that there is nothing left for me to say legarding the figures' beyond adding my testimony to that of the oily eers by assuring you than ample provi" sion has be. v n made for doubtful accounts,. . and that the business as represented in Bound and healthy. In addressing you in August, 1902, I estimated the deficiency, in tho Assets" Board then aft £677,000, find I also estimated that it, would be reduced by at least £100,00* annually. Of course that estimate was on the safe fcide, and from what tha Chairman has just said you wiH see that the valuation of the assets makes tho po&ition to-day much better than whato two years ago I led you to expect i«r " would be. Now w-e must accept th» estimate of tho present deficit— viz. M £328,000 — as being the closest we can geU and I trust I shall not be legarded as) being unduly sanguine -when I say that at the rate we are going it only takesan arithmetical calculation to give v* the expectation that the deficit will disappear altogether in three or four years 4 The next question which will preseatj, itself to fcbareholders is, will the profits of the Bank he more largely distributed in the shape of dividends after ihe deficit) ' shall have been wiped off? Speaking for myself alone, and not for my colleagues on the Board, I am of opinion that therd will be nothing to hinder such distribution, if the Board of that day, having ' due regard to setting a&jde reasonable amounts to augment the reserve 'fund, sea fit' to recommend it. I wouW bere congratulate you on the arrangements mailti in your iuterests with the Gowmmeut ; and embodied in the A-cfc of 1903. " Clause " 15 of that Act enjoins 'tu'a-t " tho "surplus net profits of the Bank shall ,be uj)pfieft as they now are, but only so long as the liability ■of the colony continues to subsist in respect of debentures issued by the Assets Board. Clause 25 says that . ■ when by valuation it is found tfeafc thei . assets arc sufficient to meet .the ontr, standing liabilities of the -Assets Board. " the Governor may by Order-in-Council declare that the Assets Board shaft'.' ceasa" to exist, and' thereupon its assets amS • ■ liabilities shall' pass to, vest in, and! devolve upon the Bank, and the '.BjmJo shall thereupon redeem all the outstanding debentuics, and deliver them to the" Colonial Treasurer for cancellation. This, I think, is quite conclusive. The modus operandi ..will naturally be' that tho re- - mainder of tho assets will appear .i.n tha * Bunk's balance-sheet under the heading - ■'Assets' in Liquidation." The amount of that accoimt will be carefully kept ' within the value of the assets represent^ ing it, and any provision which from time to time may ppssibly have to bo made for losses on realisation will not be likely to seriously affect the Bankls pronb and loss account. "So much for tha near future. Comparing the deficiency as it exists at present with the value of tha goodwill of the Bank of New Zealand, I can only say that I congratulate you mo*vt heai'tdly on the position as it is. I have now to announce that I shall again bo a candidate for re-election as a director in December next, and trust to receive I another extension of your confidence. I formally second the adoption of tho report and balance-sheet.. OTHJEE SPEAKERS. Mr. H. Beauchamp spoke from liis own experience of the good work being done by the London Board, and he added that the Bank shipped from the colony lnsis year approximately 45,000 bales of wool, in addition to a large quantity of produce. In his opinion the position and prospects of the Bank were better than they had ever been since its inception. Mr. M. Kcbboll said he supposed the , Bank couid not help underwriting the* ' Government loans. The Chairman: I made no referenca to the loan. A Shareholder : He carefully omitted it.' Mr. Kebbell said it was a question whether that was business that the Bswik should undertake. While there, were largo profits in underwriting there were also large losses. The expenses for dcjjreciatiou of guaranteed stock had been omitted. The Chairman: We'll bo better able ta do that when wo know what they are^ The expenses wont be met till July. Mr. Kebboll also asked if the item de* posits- £10,000,000 included customers' " credit balances... The Chairman : Of course it does. Tha balance-sheet, lie added, -was in the form prescribed by statute, and approved by tho Government auditor. i Mr. Kebbell: May I ask the amount of money Uie Bank has invested in Got* eminent 3 per cents. Tlie Chairman : You may ask it. tMr. Kebbell : You won't tell me? * Tho Chairman: TSh>. Mr. Kebbell: "What are they writt«* down to? Tie Chairman: I am not p*ep*r«&to answer that. Mr. Kebbell went on to complain oi tho piecemeal manner in which tho re- , mainmg shares of the Bank, \rhifh. nowi total £18,000, were offeied to the public, nnd suggested that they should ba offered at one time after giving eaci» shai-dioldcr tbree months' notice. Dr. Newman urged tho claims of tha junior clerks^of the Bank to larger salaries. He was, he continued, sorry to saa that the Bank had lost a little moneyin underwriting— .perhaps they werei rather green at the game — but there- wa» uo iuovo profitable game under the sum if it Mas bkilfuJly cniried out. He also asked w-hother the Cbahman thought ths Assets Board would drop into the handa of the Bank before the five years period had expired? Mr. J. Mills (Port Chalmers) said the. shareholders, in his distr\«t though!, tnft balance-sheet was one that the shareholders ought to be proud of. Sonic of them wanted to bring befoio the meeting the*desiiablene.=s of iuciva&iug the remuneration of Uite directors. Mr. T. W. M'Kenzie also expressed high appreciation of the position of th« Bank, Tho Cbairnvm, in replying, said h* would touch on the provision against depreciation of gilt-edged securities. Mr. Kebbell said the «Wcho!ders would like to know the amount tho Bank had invested in the colonial Government's 3 per cents. • The Chairman said he would give every information to which he thought the shareho.ders were entitled. " - Mr. Kebbell : I .ask a simple question —v\ t was the sum provided for ex,i T ) he ™ hairman: We haye rrotr ' ot ulvon Ih.it Ihe expends aie not y c -t inclined. havo climated a sum which ini»hfc ptopeily be scti aside. ° Mr. Kebbell: It might, for' all ™ know, have cost £10,000 to float this