FINANCIAL REVIEW. BANK OF NEW ZEALAND.

Evening Post, Volume LXXVIII, Issue 134, 3 December 1909, Page 7

FINANCIAL REVIEW. BANK OF NEW ZEALAND.

HALF-YEARLY liIEETING, REVIVAL. IN TRADE. "CAUTKXN" MUST BE THE WATCHWORD. The half-yearly meeting of sharehol<s« ers in the Bank of New Zealand was held in the Bank Chambers to-day. Mr. .Harold Beauchamp, chairman of directiors, presided. The board of directors was represented by Messrs. Martia Kennedy, W. Watson, W. Milne, J. B. Reid, and W. H. Quick. Mr. W. Callender, general manager, and Mr. B. M. Litchfield, chief auditor, attended. About twelve shareholders were present,; THE CHAIRMAN'S ADDRESS. Mr. Beaucharap, in addressing thai meeting, said that no statement of ac-» counts was presented at the bank's half-, yearly meetings. The principal business was the election of a director. Mr. Mar-, tin Kennedy, who had occupied a seat continuously on the board since 1894, again offered his services, and there being no other' candidate Mr. Beauchamp had pleasure in declaring him elected. In June last, the chairman of directors continued, he stated in his address that consequent upon the conservative policy then Deing pursued by this and othen 'banks trading within the Dominion, shareholders should bt> prepared for adiminution of profits. The accounts for the half-year ended 30th September showed that these anticipations were realised. Still, the results for the period "under review were gratifying, and he had no doubt that, at the close of ths present financial year, they would ba able to transfer a substantial amount to the reserve fund, and recommend tha payment of a dividend and bonus equal to that received for the year ended 31st March, 1909. In the meantime, for tha half-year ended 30th September, the board had declared an interim dividend of 5 per cent, to the holders of ordinary shares, and a similar amount in respect to the preference shares issued to tha Crown. This dividend would be payable at the head office on Monday next, 6th inst., and at branches on receipt of advice. TAXATION. If the proposals now before Parliament regarding the taxation of banks became law, the Bank of New Zealand would ba called upon to contribute a much larger, sum than it now did. Calculated upon the present volume of the bank's business, the increase would amount to not less than £15,000 per annum. The bank's taxation under all heads last year; totalled £35,640. This included payments to municipalities and public bodies, as well . as to the General Government. He desired to congratulate shareholders and the country generally on tha better and more promising monetary conditions that prevail to-day, and he did not think it would be improper on his part should he claim some credit for, the banking institutions of New Zealand for the change that has taken place. A year ago, the banks were criticised inside and outside of Parliament for not lending freely, notwithstanding that the aggregate of the advances and discounts, as at 30th September, 1908, exhibited a very substantial increase on the figures of the previous year. A good' many people were under the impression that it was the duty of the banks to advanca against all and every kind of security. The sooner that impression was removed the better. That the bankers of the dominion pursued the right course during the past twelve or eighteen months was proved to some extent by the easier tendency that now. prevailed in the local money market, STRONGER*, FINANCIAL POSITION. The banks were, to-day, in a much stronger position, and quite capable of furnishing all the legitimate banking accommodation that might be required. The bank returns for the past quarter, showed strength, and the shareholders had but to compare the aggregate of the fixed and free deposits, and the advances and discounts, with the figures for the corresponding quarter last year ; to appreciate the point.

Last year ihe banks helped their customers liberally, and to this was largely due the fact that the depression was mild and of short duration. THE OUTLOOK. A distinct revival in trade appears to have set in all over the world, bufc particularly jn the United States— of late years the storm centre of the financial world. Every mail received recently had brought intelligence of reTiewed activity, in one industry or another. The steel trades were particularly busy, the demand for steel rails being especially strong. The production of pig iron in the United States was now up to the highest level of recent years, and the report of the German Steel Syndicates stated that the orders on their bodes on 10th September amounted to about 550,000 tons more than at the corresponding petfiod last year. In Great Britain there was a distinct improvement. Ship-building— the main industry of the United Kingdom — was showing signs of recovery. The European and American money markets were at the moment rather high (the Bank of England rate now etandimj at 5 per cent), but this was not an unusual feature at this time of the- year: The favourable conditions now apparent in Europe and America are being reflected in New Zealand. The export and import returns proved conclusively that the community had profited by tho temporary depression. Traders and producers had been forced to face the position, and their efforts have resulted m th© equilibrium being restored. The exports showed a substantial surplus over the imports, and, so far as New was concerned, that amounted ■ ?n/£?^ 0UK * 16 trade balance. . Whilo in 1907-8 the imports exceeded the exP o^ by £1,380,281, for the year just I*7 J£, c , exports exceeded the imports by £3,784,151, and New Zealand was back to the position of 1906-7, which was the year of her extreme prosperity. It was necessary for this country to snow a substantial excess of exports over imports, because it had to meet annually a very large interest liability in connection with public and private in. debtedness. WOOL. After a reference to the high pric» realised for wool at fhis season^ sales, M*k Bgaucliamp. laid that whether this

was likely to be carried into the New Year was problemical, for wool men were likely to be guided by their well-known maxim : "When wool is dear it is dangerous : when it is very clear, it is vary dangerous." Values were extremely high just now, and only twice in the last nineteen years had they been quite as high. There might be a reaction, but in any case it was very probr.ble that, higher prices than last season would be obtained. New Zealand would produeo a larger clip this year, and, with the higher range of values, quite two ltiillions sterling should be added to the income of the producers. OTHER PRODUCTS. An increase of £250,000 should be reaiised from butter and cheese this year, through increase of exports, and it was satisfactory to note the improvement in - prices" ' for mutton and lamb. Prices for hemp had improved materially, and wheat and oats and other grain and pulse would again add ireatly, to the value of the dominion's exports. He was of opinion that when the produce year ends on 30&h September, 1910, tno amount of New Zealand's exports would establish a record in point of value. GOOD PROSPECTS. The prospectsbefore New Zealand were decidedly good, and the bank, with its ramifications and close connection with the producers, must necessarily benefit. Ho. could not, however, refrain from repeating a warning note : caution must continue to mark the policy of the trad-, ing' community, and the land speculators -throughout the dominion must endeavour to. moderate their views on values. New Zealand had greatly increased her obligations in recent years, and while she .was well able to faithfully meet all engagements, there was no reason why the people should be handicapped in their work by ridiculously high land values. " Caution "- should be the watchword of the' people now and always. THE DISCUSSION. Mr. Martin Kennedy, while congratulating the chairman on his address, took exception to tho policy of not declaring the' usual bonus of 2£ per cent. The dividend being confined to 5 per cent, might cause shareholders to doubt the stability oi the bank. So long as the bank was making tho profits it was — eqtial to those oi any bank in the dominion—why should they not pay dividends" equal to those of the other banks in"; New. Zealand? There was some reason for building tip a strong reserve, bu£ the reserve was already nearly 100 per cent, of the capital, equal to any other bank in the dominion. It was not quite so large as some banks had, but their responsibilities were larger. Then there were the claims of shareholders that the money "written off should be restored to them, and their claims w.ould not be so chimerical if the constitution of the bank were the same as that of other banks. Thero was no reason why they should not dknde the dividend in volume. ' Ho was' disappointed * at the non-payment of tho usual bonus. He had not gone back on his previous opinions on this' matter. They could reasonably pay a bonus on the present occasion and 2{ per cent, on the next occasion. It was impossible to expect every year -to be a record year. THE- STATE'S SHARE. People thought the State should have a larger slice in the bank than it had got, continued Mr. Kennedy. Personally he would not mind these expressions of opinion if they came from irresponsible persons. But these opinions had been openly expressed in Parliament. It was high time the shareholders entered" a protest against any action of the kind indicated, and they ought to ask the shareholders in London to combine' with them in protesting. If the State had wanted they might have obtained double their present holding at the start. At that time the position was different. The shareholders now must resist to the last any attempt on the part of the State to take any more from the bank. If the State must take • more, let it carry the case before the Arbitration Court and pay the full earning power of the shares. Until that position was well defined, there would always be uneasiness, not only among shareholders in the Dominion, but among thoso beyond. The sooner the position was understood and affirmed the sooner would the confidence of the Dominion be secured. In conclusion Mr. Kennedy asked for a reasonable dividend — such a dividend a-s the shareholders would approve. Why should the sharaholders not have such a dividend as tiey thought proper, provided nothing was done to destroy tho stability of the bank "Would any reasonable man say, -wrfih a reserve of £750,000, the payment of a 2£ per cent, bonus would destroy the stability of the bank? He wouki therefore support the declaration of the dividend with a regret that a 2£ per cent, bonus was not adopted. POINTS ANSWERED BY THE CHAIRMAN. The chairman replied. As regarded the profits made during the first half of tho present financial year — the six months ending the SOth September, 1909 » — they were large, but not so large' as for the. similar period' of last year. No difficulty was to be apprehended in making a, substantial addition .to the Reserve Fund at the end of the financial year, and in paying tha samo dividend and bonus as was paid, last year. A bonus was rarely declared in any company for the first half year. He would support a larger bonus than 2^ per cent., but not until the reserve fund had reached one million-- sterling. Possibly, unless this was done and the reserve built up rapidly they might have to go to Parliament for authority to increase their ■ capital. If they approached Parliament it would mean opening up the affairs of the Bank of New Zealand. If they could go along steadily piling up' the reserve fund trom year to year he was hopeful they would be able to pay off the £3,000,000 due in 1914 and also to extend operations without increasing capital, and thus_havo a largo earning power on a small amount of capital, li 1 they were paying 15, 17, or even 20 per, cent., their shares would compare very favourably with those of other banks. In proportion to its" capital the trade of the Bank of New Zealand was larger than, that of any other bank in Australasia. Again emphasising the desirableness of strengthening the position of the bank before coming into line with the others in the payment of dividends, Mr. Beauchamp added that the Govern ment had always exhibited a spirit oi eweet reasonableness towards the bank. Still it would be well to obviate the necessity of going before Parliament for authority to increase capital. Things ■were moving in an extremely satisfactory manner. He was hopeful with the great earning power during the next six months they would be able to make up for tbe very slight falling off in profit* during the first half of the financial year. The report was adopted without further discussion. SATISFACTION WITH THE MANAGEMENT. Mr. Martin Kennedy, in moving a vote •£ thanks to the chairman, said they had every reason to be satisfied with the management. Mr. T. S. Weston seconded the mojKon, which was carried unanimously. On the motion of Mr. Weston, seconded by Mr. J. B. Harcourt, a vote of than-ks was accorded .the staff. Mr. "W. Callender, general manager, replied, expressing a hope that his approaching visit to England would prove beneficial to tho bank. The meeting then clojjgtfc,

iuxed and Freo Deposits. 1909. 1908. Bank. £ £ New Zealand ... 10,199,023 9,496,558 Union 2,790,889 2,78^,534 New South Wales 3,009,416 3,057,706 Australasia ... 1,736,224 1,771,716 National 3,243,563 3,197,471 20,979,120 20,310,007 (Note — Theso figures do not include Government deposits.) Advances and Discounts'. 1909. 1908. Bank. £ £ New Zealand ... 7,091,411 8,480,885 Union 3,160,610 3,371,833 New South Wales 2,505,193 3,211,633 Australasia ... 2,756,305 5,296,663 National 2,657,188 2,857,643 18,170,707 21,217,953