BANKINGS PROFITS
ARE THEY EXCESSIVE »
Considerable, criticism has been made lately of banking profits, and inquiry of one local bank, the National Bank o£ New Zealand, Ltd., whose business is confined solely to New Zealand, elicited the information from the general manager (Mr. J. T. Grose) to the effect that the dividend of. 12 per cent, distributed in July last was on the paid-up capital of £2,000,----000, but for the year to 31st March, 1930, shareholders' funds employed in the business were:—Pnid-up capital £2,000,000, reserve fund, £2,000,000 balance of m^ofit and loss account earned forward ±.Ioo,UUU, in all £4,155,000. On the total amount the earned profit of £282,917 represented 6 8 per cent. On these shareholders funds of £4,155,000, however, the 12 per cent, dividend paid was equal to oiily 5.77 per cent. The reserve fund of £2,000,000 consists to the extent of £1,387,500 of funds actually contributed by shareholders by way of premiums on new issues, and tho balance is from undistributed profits. From 1885 to 1897 the dividend distributed by the bank did not exceed 5 per cent, on the paid-up capital. Between 1906 and 1025—both years inclusive—the bank made seven new capital issues, all at a premium, which premiums make up the £1387,500 (or 69 per cent.) of the published reserve fund of £2,000,000. For the last thirty years the dividend distributed to shareholders has not exceeded 7 per cent, on their own funds in the business. It is held by the bank that this is but a moderate return ou such an investment. For more than twenty years shareholders received not move than a 5 per cent, dividend, and the return they are now receiving, that is, interest at a rate a little less than 6 per cent, per annum, is not considered to be excessive. This reserve fund, which is invested in Government securities, is used in the business of the bank; and with the carry-forward and internal reserves constitutes a most substantial security to depositors, as is right. The shareholders are large in number, but the average holding of shares is small, as is common to all tho banks.
BANKINGS PROFITS
Evening Post, Volume CX, Issue 86, 8 October 1930, Page 10
Stuff Ltd is the copyright owner for the Evening Post. You can reproduce in-copyright material from this newspaper for non-commercial use under a Creative Commons BY-NC-SA 3.0 New Zealand licence. This newspaper is not available for commercial use without the consent of Stuff Ltd. For advice on reproduction of out-of-copyright material from this newspaper, please refer to the Copyright guide.
Log in