"A DIFFICULT YEAR"

Evening Post, Volume CIII, Issue 140, 16 June 1922, Page 7

"A DIFFICULT YEAR"

BANK OF ; NEW ZEALAND

SUPPORT TO THE PRIMARY.

INDUSTRIES

"AN 'ABNORMAL AND UNDESIR

ABLE STATE OF THINGS."

The annual meeting of the proprietors of the Bank of New Zealand was held to-day at the Bank. Mr. George Elliot, chairman of directors, presided.

The Chairman, iv moving their adoption, said: The balance-sheet and profit and loss statement recorded the results, so far as that Bank was concerned, of one of the most trying and difficult in the business history of New Zealand. At the last annual meeting £150,000 was transferred to the Reserve Fund out of the profits for the year ended 31st March, 1921. It was proposed to transfer a like amount from the profits of the past year. This will bring the amount of the fund up to £1,675,000. The total of shareholders' funds in the Bank, including tho carry forward, will then amount to £5,480,818. These I figures do not include the 4 per cent. Government guaranteed stock of £529,----988 10s 6d. Notes in circulation, £4,----294,230, show a decrease of £477,262. Deposits. £28,676,603, have dcreased £5,790,052. Bills payable and other liabilities, £3,713,175, have decreased by £403.398, mainly due to falling off of sales of London Exchange. The reserve for taxes is £426,000. which will cover income tax on the profits for the past year. Mr. Elliot remarked that in the Dominion alone we paid lasfyear the following rates and taxes: —lncome tax, £342,022; land tax, £18,143; tax on note circulation, £141,004; rates, £11,----039; total, £512,208. Coin and cash balances, investments, money at short call, and bills receivable in London, £14,----402,673, show an increase of £152,526. In order to meet the needs of customers in the Dominion, the Bank, had for a time to draw heavily on its reserves in London, but these have since been reThe remainder of its investments there are at present worth much more than they show in the book values. Investments in the Dominion and Australian Government securities amount to £3,552,016, showing a decrease of £360,----402, representing proceeds of matured investments. The balance stands in the books at the valuation of a year ago, though at present the saleable value is much higher. Bills discounted, other advances, etc., £24,783,559, show a decrease of £5,723,068. Landed property, premises, etc., is set down at £296,472. The sum of £50,000 has again been' set aside from the year's profits for writing down this asset. The properties are worth considerably more than the figures at which they, stand in the books. PROFIT AND LOSS. Mr.. Elliot held that the result of the year's operations had been quite satisfactory, notwithstanding a falling off of £145,213, as compared with the previous year's profits. The decrease was largely the result of overhead charges being greater by £110,452, of which- £92,745 was in the item rates and taxes. It was explained at the last annual meeting that the exceptional profits then declared were mainly due to the benefit of unusual exchange rates and to the handsome returns received from large investments in London. The profits now under, review include surpluses on book values: of matured investments and investments which were realised (after the sudden and unexpectedly heavy rise in stocks in London) in order to meet the requirements -of the Bank's customers in the Dominion. Exchange profits in the earlier part of the year wei'O unusually high, but have since fallen off considerably, and a further reduction is to be looked for. For these reasons, and also because financial conditions in the Dominion are not entirely satisfactory, an addition of £69,543 has been made to the carry forward, which now, j amounts to £430,818. DIRECTORS AND STAFF. Reference was made by the Chairman to the ex-chairman (Mr. Harold Beanchamp), and Mr. R. Kane, Mr. Recce, and himself, as directors. Shareholders were then reminded that the Bank of New Zealand Act of 1920 made an alteration in the term of office of the directors, extending it from two years to three. It followed that, every third year, no vacancies by effluxion of time would arise. The coming year is the first which is affected by this change. None of the Government's representatives would go out of office on 31st March, 1923, and, when the shareholders meet in December next, they will not have to elect or re-elect one of their number to represent them on the board.

The members of the London Board had supervised the business- of the Bank there with the same care as they had shown in the past, and tho directors desired to record once more their deep sense of obligation to them. "It gives me great pleasure to speak of the good- service which, during another year, has. been given to the Bank by its staff," Mr. Elliot remarked. " "The anxieties, which had begun some months before our last'annual meeting have continned throughout the_ year, and a heavy burden has been laid upon the chief exeentive officers of the Bank. The board feels sure that shareholders will join with them in appreciation of the services rendered by these officers during an exceptionally difficult time. As living costs are not yet back to normal, we have granted bonuses to all members of the staff, except those young and single men whose Salaries are on the " scale " which was adopted about two years ago, and which is based upon the higher costs which then prevailed. We have also made a special donation to increase pension benefits."

The Chairman then dealt with State and agricultural banks, also with the rate of interest on overdrafts, and other subjects, nnder special headings. PRESSURE ON RESOURCES. The Chairman admitted that, as compared with the figures at 31st March, 1921, the Bank's advances, including discounts, show a reduction of £5,723,068, but this reduction had not relieved the pressure upon its resources, for it was more than offset by a contraction of £5,799,052 in deposits in the same period. Between June, 1920 (when the Bank's deposits in the Dominion reached highwater mark), and January last, there was a drop in the deposits of no less than 13 millions; at the same time advances increased by 5£- millions; the total drawing on the Bank's resources being 18g millions. These figures spoke volumes for the strength of the Bank and the liquid nature of its reserves. His predecessor had referred to the financial stringency which the Dominion was experiencing, its causes, «and its effects upon the position of the business community; its effects also upon the position of the farming community, which latter forms so important a portion of the constituency ot the Bank of New Zealand. Little change had taken place since then. Financial stringency still existed, consequently the attention of the directors and officers of the Bank had been fully taken up with problems arising from'conditions such as they had not experienced for many years. Advances to the trading community wevc much leas than they were a-t the beginning fi f the year; liquidation of the

excessive stocks of imported goods, that created so much difficulty from September, 1920, onwards, had been vigorously carried out, often at great sacrifice. The large measure of support which the Bank accorded to importers had therefore been fully justified, and its losses in this class of business had been of little consequence.

LOW PEICES AND LOCAL BODIES.

The low prices ruling, for several of the most important products of the country, obliged primary producers, and those connected with them, to lean heavily upon the Bank. It was hoped, however, that when next season's produce became available, those advances would be materially reduced. "We have felt it to be our duty to give the fullest measure of support to the primary industries of the Dominion, even at the risk of loss in some cases," said Mr. Elliot. He then passed to local bodies' advances, stating that '"prior to 1918, local bodies were able to raise money locally on loan issues with comparative ease, but the stringency which aroso nearly two years ago made it difficult, if not impossible, for them to float loans on the local market, at siuch rates of interest as the Government would sanction. In many cases the necessity for meeting commitments which had been made in the expectation that loan money wonld be available had to be faced by recourse to the banks, thus adding to the pressure on us.

"This pressure is now easing, as several local bodies recently have made successful local issues: of loans at a 6 per cent. rate. The money could have been obtained in London at a slightly higher cost, and, in the interests of {he Dominion as a whole, it is to be regretted that the loans were not raised there. Until financial conditions here become more normal, it is important that local resources should remain available for the further development of local industries, and that, when they can do so at reasonable cost, local "bodies should borrow in London. Prior to the recent improvement in the London money market, a number of our local bodies raised money in Australia on 10-year bonds at 7 per cent, per annum."

Having reviewed the banking position as at 31st March last, and quoting the average aggregate figures, Mr. Elliot said : "Our advances have been most carefully scrutinised, and adequate provision made for all possible losses." He then moved that the report and balance-sheet as submitted to the meeting be adopted.

Mr. K. W. Kane in seconding, said as he was absent from New Zealand on the occasion of the last half-yearly general meeting, held in December, when he was re-elected by shareholders as one of their representatives on the' board, lie took that opportunity of personally thanking them for again returning him, and of assuring them that their interests will continue to^receive his most careful attention. He enjoyed the fullest opportunities, not only of discussing the Bank's' business with the London directors, but also of .benefiting by their matured knowledge of London finance. He went on : "It is, I think, only proper that I should assure you of the judgment and care with which your interests in London are watched by these gentlemen. As most of you are aware, three of our five directors in London are of eminent standing and ripe experience in London finance, while the other two possess, in addition, an intimate personal knowledge of the Dominion and its affairs. I hesitate to particularise, but I cannot help referring specially to how much we owe to the London chairman (Mr. Lubbock), whose unremitting services are invaluable to us. It was a pleasure to be associated with these gentlemen in London, and I gratefully acknowledge the assistance which they afforded me in the Bank's interests." As to the London staff, the Bank's affairs were in, capable hands, and under the able guidance of the London board, these officers will maintain unimpaired the high reputation that the Bank enjoyed in London's financial' circles. He ,was pleased to observe how high, the credit, of New Zealand stands, in the world's financial centre. No better evidence of this standing could bo desired than the recent fktation in London of' a New Zealand loan on terms, he believed, better than any obtained by a Colonial Government since 1913.

Mr. John Mill said he would like to know if Argentine stock' raisers were better placed in regard to their financial ■relations with the banks than were those of New Zealand?

The Chairman said it was difficult to lanswer that question, because of .the difference in circumstances, but he understood that the rates of interest charged ■by the Argentine banks on advances similar to advances in New Zealand were 7 to 9 per cent.

A shareholder asked when further capital of the bank was likely, to .hecalled up.

The Chairman said he- could not give any idea when the further shares wonld be issued. Shareholders would be informed in ample time beforehand. The Teport and balance-sheet were then adopted unanimously.

The Chairman announced that in future it was intended to pay the dividend in equal instalment?, at the half year.

Mr. John Mill Mien said :—"lt gives me very great pleasure indeed to propose a hearty vote of thanks to be recorded in our minutes to our directors, general manager, and staff for the services rendered by them during the year just ended. This includes the services of the directors, manager, and staff in En-gland. They have willingly given the ibest of their ability to the advancement of the bank's business, and in the interests of shareholders and the Dominion at large. We, as shareholders, are very much indebted to our worthy Prime Minister, Mr. Massey. for the way in which he explained, in the House of Parliament, the movement that ha 6 been going on by some members of Parliament -to get Parliament to take over ilia Bank of New Zealand, as a State Bank. Mr. Massey ably pointed out to Mio House that it would not be to tho interest of the Government oi New Zealand to possess the institution as aState Bank, inasmuch as the Bank of New Zealand pays a very large sum annually in the way of taxation of almost :5600,000, besides dividend and interest on. guaranteed stock, so that the bank is an immense source of revenue to the Government.

"The bank has now one hundred and thirteen branches, which compels the bank to have a staff of over thirteen hundred employees. The salaries of its employees amount to nearly £400.000 a year. The bank in. its wisdom and good management has been enabled to lay by and add to from time to time a large sum for a Pension Fund for its employees, so that their old age is.provided for by the bank, thus avoiding any necessity for claims upon the State.

"No doubt Mr. Massey knows 'that it takes two to make a bargain, and now that the bank is in a flourishing condition with a reserve of £1,675,C00 it cannot be taken from the present shareholders without a fair and adequate price being paid for the concern, but if it came to be taken over our shares would be worth a great deal more Chan the present market value, so that it is to be hoped that the bank will go on and prosper, notwithstanding its enemies within and without."

Air. T. Shatter Wesfcon seconded ihe vote of thanks.'and that most heartily, especially mentioning the general manager upon whom the strain of the past year must have been enormous. But he

was, perhaps, helped by the-great confidence that the shareholders reposed in him and in the directors. ,'

Referring to the late chairman {Mr. Harold Beauchamp), Mr. -Weston declared that all shareholders would most cordially endorse the appreciation expressed in the chairman's speech of the services of Mr. Beauchamp.' The vote of thanks was carried with acclamation.

In acknowledgement, tiie Chairman expressed the satisfaction that was felt toy the directors in the recognition of their efforts, and he emphasised the work ■done by the general manager and, the •staff. ..;..,; -;:.'.;::'

The general manager; in returning: thanks for the vote, testified to the 'loyalty and interest-of the staffj"'aTsb" referring to its great appreciation of the diberality of the directors, more especially ' •by way of the bonus and the additional subscription to the pension fund. :.Share:, holders could rest assured that the .etaS would continue to do its utmost in ih* ■interests of the bank. ; ' ,

This concluded the proceedings.

The Chairman's remarks regarding a State Bank, rates of interest, and overdrafts appear on other pages. ■ .