THE BANCK OF NEW ZEALAND.

Evening Post, Volume LXXIV, Issue 138, 7 December 1907, Page 6

THE BANCK OF NEW ZEALAND.

The Bank of Now Zealand's meeting yesterday was marked by an appeal for an increase in the dividend. Tho profits 'of tho .Bank for the last four years have been enormous, amounting in tho aggregato approximately to a million and a quarter sterling, and it is quite natural that shareholders should hanker for a larger slice of tho good things. It must not be forgotten, however, that the last four years havo been distinguished by a world-wide activity in commerce and industry ; high prices have ruled for all kinds of raw material, and banking business gonorally has flourished like tho green bay tree. It is a truism to state that every period of expansion is followed by a reaction, \yith good seasons and buoyant prices, prudent banking management strengthens itself against the days when more difficult conditions provail. Almost every item in New Zealand's list of exports this year has shown a decline in price compared with a year ago, and this shrinkage in values will seriously affect the amount of commission to bo earned by tho Bank, for it' must not be overlooked j that the quantity of our great primary | oxports has not increased in anything like the same ratio as their value. The public of New Zealand ha 3 shouldered a large liability in connection with the stock and preferences issues of tho Bank, and as the depository of the Government's funds tho Bank benefits to a very considci'ablo extent. Again, it must not bo lost sight of that tho million 4 per cent, stock will mature in six years' time, and really can only bo treated as equivalent to a species of fixed deposit having a currency for that period. The Bank's paid-up -capital, therefore, consists of the half-million preference shares, and the half-million in ordinary sharra. Its only reserves are the uncalled capital of £3 Cs 8d per share, and the reserve of £250,000. Yet the Bank of Now Zealand has to compote with the three gieat Australasian institutions, each boasting reserve funds of j over a million, and uncalled capital j varying from £20 to '£40 per share. When tho amount of public deposits is compared with the actual paid-up capital and reserves tho local institution again comes out unfavourably, for it holds £8 of tho former to £1 of the latter, whereas tho threo Ausralasian Banks hold slightly over £G of public money for every £1 of their own resources. It is undoubtedly owing to the Government backing that the Bank has attracted such largo deposits, and no similar institution anywhere has got tho sinews of war provided -at such cheap rates, hence it is able to show a profit calculated on the basis of capital and reserves of more than 10 per cent — a remarkable result when \ye consider that the hinrhly successful Bank of New South Wales shows 7>i per cent., and the Bank of Australasia 10£ per cent. It therefore savours of ingratitude for a shareholder to remark that "it was not so much Government assistance which had placed tho Bank on its feet as the ' sympathy and goodwill of the. public." It is certainly remarkable to find "sympathy" being regarded as a factor in banking. Even Macaulay's schoolboy could have told the speaker that, had it not been for the Government virtually ontnring into partnership with tho shareholders, the sympathy of the public would have counrod for' nothing in establishing anow the fortunes of the Bank of New Zealand. Another shareholder was scarcely correct in making Australia the scapegoat for the losses of the Bank in tho past. It does not need a very tenacious memory to recall the losses made by tho Bank in the Auckland and 1 other provinces in the bad old days. These attempts to induce the directors to increase the dividend above 10 per cent, arc, -ivo frankly consider, ill-timed and ill-advised. The Bank has still much to achieve, and the directors, we believe, can be relied upon to recognise their dual duty to the country and the Bank uy consistently straining every nerve to build up a reserve that will bear some adequate proportion to the vast business of the institution.