BANK OF N.Z.

Evening Post, Volume LXXXIX, Issue 143, 18 June 1915, Page 2

BANK OF N.Z.

INFLUENCES OF THE WAR A TWO-MILLION RESERVE FUND ANNUAL MEETING. The annual meeting of the proprietors of the Bank of New Zealand was held at the banking-house to-day. Mr. Harold Beanchamp, Chairman of the Bank, presided, and the following directors were also present :— Messrs. R. W. Kane, Martin Kennedy, W. Reeco, J. H. Upton, and W. Watson. The Chairman, in reviewing the bal-ance-sheet, explained that the capital of the Bank, as at 31st March, was as follows :— Authorised — 1 per cent, guaranteed stock, £1,000,000; "A" preference shares, £500,000; "B" preference shares, £1.000,000; ordinary shares, £3,000,000; total, £5,500,000. Paid-up— 4 per cent, guaranteed stock. £528,988; "A" preference shares, £500,000; "B" preference shares, £250.000: ordinary shares (old issue), £1,000.000 ; ordinary shares (new issue), £475,710; total, £2,254,698. The new ltsue of ordinary shares was for £500,000, of which (as shown) £475.710 has been paid-up. The 559 shares unapplied for of the issue of 75,000 new ordinary shares were offered to shareholders for sale by tonder. Applications were received aggregating 10,794 shares, the average price tendered being £13 3s 9d per share. The 559 shares were allotted to the highest tenderers, at an average price of £15 10s 6d per' share. With regard to the guaranteed stock, this appeared at £528,988, as against £1.000.000 in the previous balance-sheet. The old stock matured on 19th July last, and, the Bank's finances being in a. strong position, the board decided not ti> underwrite the new issue, but to give existing holders the option of exchanging their stock. The balance of the old issue, with the exception of a few thousands that have not yet come in, has been paid off. At a suitable juncture, the Bank will make arrangements to issue the balance of the new stock , but in the present unfavourable state of the London money market nothing can be done, and, the Bank's finances being easy, we are able, without inconvenience, to await the arrival of a favourable opportunity. THE RESERVE FUND. La-st year the Reserve Fund was in> creased to £1,550,000 by the transfer from profits of £375.000. This year, by the addition of the premium received on new shares (Jew expenses of issue), £365.536. and the transfer from profits which the board proposes to make, £84.464. the Reserve Fund will stand at £2.000,000. Of this amount. £1,000.. 000 . is invested in British Government securities. Notes in circulation amounted to £1.676.051. more by £686.169 than at 31st March, 1914. This large increase was clue to Bank notes having been legal tender since the commencement of the war. Gold bad been gradually withdrawn from circulation, and notes had replaced it. The deposits, which include free, fixed, and Government deposits. stood ftt £18,741.657, an increase of £671,044, as compared with the figures of a year ago. Government balances were somewhat less; but deposits from the public— both ' free and fixed — were substantially larger. Bills payable and other liabilities stood at £1,670.103, an increase of £266,647 on the figures of twelve months ago. Coin and cash balances at bankers' and bullion, together amounted to £4,827,522, as against £3,377.185 at 3lst MarclK 1914. The increases in the Bank's note circulation ' and deposits and tne general financial unrest rendei*ed prudent the maintenance of larger gold reserves. Money at short call, Government securities, and other securities in London, together amounted to £6,136,996, an increase of £60.248 as compared with twelve months ago. The totals under this heading, together with the amount of bilk receivable and investments in the colonies, equalled 64.41 per cent, (or 12s lOd in the £) of the total liabilities of the Bank to the public. Full provision had been made for all depreciation in investments, the whot« of the Bank's investment securities having been written down to the minimilm Stock Exchange official quotation at 31st Moron last. Bills receivable, in London and in transit, exhibited an increase of £137.220, as compared with the figures a year ago, _ standing at £3,301.301. Ample provision had been made for any deficiency in respect of bills held, 'drawn upon banks, merchants, and others in belligerent States, and which, owing t« the war, were not piovided for when mie. The aggregate of these was comparatively inconsiderable. As compared with the figures of a year ago, bills discounted were less by £95,568, and stood at £1,186,458. Other advances. £10,662,707, showed an increase of £582.248. ENLARGED PREMISES. Landed property and premises, appropriation ' from profits, now made, of £50,000. stood at. £451.867, as compared with £449,577 a year ago. The Bank's steady growth entailed a considerable annual expenditure in providing suitable premises for the satisfactory conduct of its business. With reference to the Wellington and j head office premises, the accommodation ' which was provided eighteen years ago, when the_ building was erected, now proved quite inadequate for the requirements of the present greatly increased business, and the directors had under consideration for some time the' question of enlargement ( so as to provide the necessary additional facilities. It had been decided to place another story on the building, andto enlarge the banking chamber by taking in practically the whole of the space on the ground floor. This would give a considerably increased area for the use both of the office staff and the public, and would, it is expected, moet all requirements for many years to come. DISPOSAL OF PROFITS. The net profits for tlie year', after paying interest on guaranteed stock and making all necessary appropriations, including provision for the Bank's annual grant to the Provident Fund as well as a bonus to the staff, and the allocation of £50.000 in reduction of Bank premises and furniture accounts, amounted to £519,486. a-s compared with £308,490 at 31st March, 1914 Adding the amount brought forward from last year (£51.608). awl deducting tlie amount of intm-im divHpnd at 6 per cent, paid in Dpcembpi (£100.699). the sum available for distribution was £270.394 The doctors proposed to pay a fmther .dividend of 6 per cent, and a bonus of 3 per cent,, on ordinary and "IV pieference shaves (making 15 per cpiH. for the year), and a further 4 per cent, on "A" preference sharps (making 10 per cent, for the year). The distribution to share- j holders ' would therefore amount to I £229,459 for the year. Of the bahnco remaining, it was proposed to transfer £84.464 to the Reserve Fund, and to carry forward £57,170 j It. would be noticed that "rates and | taxes'' were £13,000 higher than last ', year This increase was very largely due to the increased note tax, consequent upon the temporary expansion of the note circulation. t BANK OFFICERS" PROVIDENT FUND. During the year, stops to .extend the benefits derivable by tho staff from tho

Officers' Provident Association had been lakun, and cairied to v successful sonelusion. To secure tho additional benefits desired, thp officers have increased their contributions to the fund by 1£ per cent, of their salaries, and the board has increased the bank's contribution by a further 2 per cent, of salaries. This made the staff's contribution 3j per cent, on salaries, and the bank's 7^ per cent., being just double that of the staff. The vote of the staff was overwhelmingly in favour of the chango, and the proposal therefore took effect as from Ist May t ultimo. In view of the splendid position in which tlie bank now stood, it could afford to be liberal with the men who had spent their lives in its_ service, and to whose labours and devotion its success had been so largely due. THE DEED OF SETTLEMENT. It was the directors' intention to have placed before the meeting the proposed amendments in the deed of settlement. Ho regretted that it was not found possible to get all the necessary preliminaries arranged in time. The proposals had, however, been circulated among shareholders, and a special general meeting had been called for 22nd October next to deal with them. In terms of the existing deed of settlement, the alterations that are approved o*f at that meeting will, before they can take effect, liave to be submitted and confirmed at a subsequent meeting. This confirmatory meeting, it was proposed, shall be the bank's half -year general meeting, to be held in December next. CRITICISM AND REPLIES. Mr. Martin Kennedy, in seconding the motion for tho adoption of the report and balance-sheet, congratulated the Chairman upon his most interesting and informative address. Tho Chairman having so fully reviewed tlie conditions, there was little for him to add beyond a word of congratulation on the position, of the Bank. No doubt it was a matter of great satisfaction to them all that, notwithstanding the trying time in tho financial world, they were able to lay such a report and balance-sheet before shareholders. He commented specially on the fact that the Reserve Fund had now reached the £2.000.000 mark. At one time, he mentioned, he was strongly opposed to the Government being permitted to take up any shares in the Bank. "Circumstances have, however, led to a radical change in my views in this respect, and I am now prepared to admit that the combination with the Government is a liappy one, and calculated to achieve the very best results, both for the Bank and for the country." Mr. S. Kirkcaldie regretted that hft could not Join in the congratulation gs to the position of the Bank. He pio» cecded to refer to special items of the balance-sheet. It was a surprise to most shareholders to learn that the item of guaranteed stock had been reduced. Ho criticised the action of the directors in failing to renew the full amount of this guaranteed stock authorised by the Legis lature to the extent of one million, and bearing interest at 4 per cent, per annum. He referred further to the reduction in profits disclosed by the fact thab a smaller sum was transferred to % reserve, and to tlie decrease in the item under the heading "bills discounted." He suggested that the amount to be ex> | pended in the proposed building scheme might be saved for the time being. Dr. Prendergast Knight said that if the Bank had accepted the offer made to it, it could have obtained the whole amount of the guaranteed f stock ; but that offer had been declined, and half a ; million had beon subscribed at iio cost . Ito the Bank. Tim wa* an expression of j confidence in the BanU. With regard to building, it was* plaih to them all that the Bank must evtorxi it* premises. Tho amount of the origin" 1 guarantee, two million had now been reached in the reserve fund. Mr. T. S. Wpston al<«o disagreed with. Mr. Kirkcaldie's criticism. It \vould have been, unwise for th© Bank k> pay 4 per cent, for the guaranteed stock until the money could be used to good purpose. With regard to profits, it must be recognised that they had written down gilt-edged securities by a large amount. When these securities recovered, as they would after the war, the Bank would be able to show tho good result. The Chairman, in replying to Mr. Kirkcaldie's statements, said it would liave been exceedingly bad business to )»ay 4 per cent, per annum when the ruling rate for money in London on short call amounted occasionally to only 1 per cent, per annum. He ako ex plained that, prior to the maturing of the old debentures an offer to underwrite the whole of the new issue for 1 per cent, was made to the Bank. This would haVe amounted to £10,000. The Bank, however, decided not to accept this offer, bul proceeded to renew by direct negotiation, and succeeded in placing in this way £528,988, at no cost .whatever to the Bank. This was an achievement of which the board was proud. As to the diminished profits — this was most easily explainable by tho large amount that was required for depreciation in gilt-edged securities. Had they been passing through normal times the profits of last year would have been able to place to reserve a larger cum than it carried to reserve for the previous year. That would give some mdi cation of the amount required for writing down all gilt-edged securities to the rates ruling on the Stock Exchange on 31st March last. As to the reduction under the heading "Bills Discounted." this was explained by the financial ease now obtaining in the Dominion. It was emphasised by the mci eased indebtedness of the banks to the public to the amount of £2,797,356. This was a natural corollary to the reduction in the item of bills discounted With regard to the Bank's building assets, the following figures were a sufficient answer : Book value, £420,208 ; managers' valuation, £781,708 ; balance-Ehuet value at 31st March, 1915, £451,867 j laftd tax valuation. £777,306. Tlie motion for the adoption of tho balance-sheet was carried without further discussion. VOTE OF THANKS. In moving a very hearty vote of thanks to the board of directors and staff, Mr. John Mill said he was sure there was not one shareholder but would agree that the board and the staff deserved great credit for the way in which they had handled the business of tho Bank during tho last few years. He hoped and trusted that the day was not far distant when the Chairman of the institution would receive the reward that was due to him for the services that he had personally rendered to theßank. _ Dr. Knight seconded the motion, which was carried unanimously. The Chairman thanked the meeting for the expression of •confidence. The director* were all working well together ■nitli the dpsire to do what was best for the Bank Mr. W. Callender thanked the meeting on bfhalf of the staff, and also exprcspn! thanks for the liberality with which tin directors had treated the men voluntm ing for the front. A suggestion was made by Mr. Weston, and heartily approved, that at tbp end of the war the names of Bank servants who had fallen should be engraved on a roll of honour and placed in the board room.