BUSINESS REVIEWED

Evening Post, Volume CXI, Issue 143, 19 June 1931, Page 9

BUSINESS REVIEWED

BANK,OI\SEW ZEALAND

"THE DOYEN OF BANKERS"

_THANKS TO STAFF

Mr. William Watson, chairman of tho Bank of New'Zeala]Hl,r-Ltcl.;, presided at the annual meeting of the Bank of-New Zealand;' "held?-to-day- in . Wellington. Other ./"'directors', present'," were ' Sir Harold-,^/-JBeauchamp . (Wellington), Messrs';'o. NichdlsOir (Auckland), K. AAndVrsony t\M;Gr'.:(lnvercargill),-and B. W. Gibbs ' (Wellington); "' the general manager (Sir Hcju-y Buckleton), and the chief auditor (Mr. "A. L. Hemptou). Mr;'l). Gi Davidson, one of the joint general"fniuiagers'of "tiro Anglo-South American Batik, London and Buenos Aires, was also -present.-. He was .formerly an officer of the Baiflt- of Ndw Zealanii. ■ — The. chairman apologised for the absence ef-- Sir- George Elliot, .director, who is absent from New Zealand.

In moving the, adoption of the an-1 nual report and1 accounts (already pub-lished-.m ?Tho :JP.ost"),-Jilr, Watson, ex-1 plained- that there.had been no change during.the year in the capital of the bank.'."'"lt was p'rop'oscd .to" transfer i £.'25,000 lioin"the-year's" profits'to- the | ieserv«;--furid^ making, the. -latter .£3,----575,0- i'his was the smallest addition td':;the;-fund'.-for;.yery..inany years. ..The balahc.&.of: profit carried forward would b&-;increased ctay.;£2B4s.; : . .Shareholders',. fiimls: would tints! amount-.-to:. Paid-up capital= (exclusive-of £-529,98? .of guar.•i n toed .stp.ck)-,.£.6,328,125;-.reserve fund, £S..ll"3,ooo.;.::ba]an.cc. of ...profit -..earned fb-rn-ar<J;-^,6!J(r,0Di;:.t0ta1:£i0,52?,1.2G.;, ; . Theeliairmaji nxplamed that in addi-, tiou to these funds the bank had-ample internal reserve built .up over a long period =of ; years,. • "It-will, be, thus apparent. that theJbank is iiua. .veiy.strong position," he said. In November last, the directors placed in* London .o'n;satis'faetory terms an-. Issue of ;£ 500,000 5 per cent, long-term mortgage debenture stock maturing loth November,!" 1.040.. .: V -Tho /proceeds - of . the.-issue■-•were used to repay advances "vvhicn had been obtained from the banking ricpartmenV,o£ the bank.. But few loans were made during "the year, only- a. limited.amounto£ ; funaVbeing available., ANP TAXATION. , ■The'r bank's frdtes in. circulation at31st, March...amounted to £3,679,957. 'J'Uo- average, ..circulation ,for the. year was £3,526,197. ■""■.'; ■'. ''. .'■"" .' I". . J'All.banlvS hero iss.uo their ow'ji notes sqeured- by la holding of. oncrthird. .in gold .and - tw'o^tbirds- in • Government, securities," - the'■ chairman' added,, "and oyoE. arid abovo this.bucking'the notes arc a.first charge, on all, the assets.of the indiyiclual bitnks concerned. • There 1 <\in-. therefore bo iio question as to the safety of the notes, nor can there ,bo inflation or deflation, as the notes in circulation arc simply, thoso .required by .tho public for their actual noeds. This is shown by the steadiness of the average circulation of all tho banks for the past'five years, as" follows:-— - .

.18^27 " -,'.',....;."..:. ■'■ £ 0,673,595. * ■1?27-2§ •....1......... ' ■:' 0,453,205 s . 1925^29"' ..... .'■',..."..: 6;372,5!)9 ;JO2SF-80. ' . .'. 6,445,446 .1930-31 :...■ 0,102,022. '

"When' trade is brisk, works, are in progreaSj- or -prices' are high,: the circulation is naturally larger-than in a dull i period. Tho gold and other securities held would enable tho banks to incronso the circulation to more than double what it is, wore that necessary.

"Tlip -direct note tax was, raided as fronj .lsE .July last from £3 per cent. 1o £..i.-10s per cent; ■ lii addition to this direct- tax, the banks pay income tax, ;it present^lss per'eont., on tho amount of notes in\ circttla.tiqn. and "on. the gold and Gdvoraihent" sciiuritios baekuiig, the issue/making a total tax of £5 5s per cent.; Cost" of the note forms and all working expenses mr connection with,-the circulation are borne by. the hanks,-6Othdt the whole ;£5 ss-per- cent, goes to the Government. "T9TAI.IIY UNTOSTIFIABLE." ; "Practically' the whole of the profit on. the note issue when the tax was 3 percent, went to the Government, consequently, theincrease of li per cent. was' totally' ■unjustifiable. "The banksfclt"!"tMfc this ■.increased1 ' imposition should- be met by somo meajis,: and therefore increased tlip half-yearly charge to/customers, for keeping accounts" by .ss."' This' increased charge still leaves this bank to face a loss of £10,000 to; S 12,000 a year, as about 30 per cent, of: our circulation, is due to the operations of the Government accounts; on which no charge is niadel" "'■■_ .Mr., Watson wont on to refer to the relationship of"notes and gold, his remarks' on that subject being published uudcr another heading. ■;"i)EPOSITS.ANI> ADVANCES. . . Deposits' at 'the balance "date, tho Chairman remarked,*'-were £1,572,923 ]ess;;Hhaii;:;';"at\ 31st' March, ■ 1930.. 'l/hia shrinkage ia in current aceountbalance's;'.. Vwhiclr -are down- by ; £2,623,----492. '.Mied deposits increased £1,593,----072. Government balances arc.'less by '-£542,503: ■■' Bills payablo and other liabilities decreased by ;£525,038, the major portion' ' of'--"which""is reduction in amount of drafts on London outstanding."" -Thel remainder, of-.the dccreaso is Tep*£a£n±cdJ;>y_..ii.ems of no special significance. . The.profit.'fpv .the y'om.. wiiif£B4s,Bl4, boing £102,720 less than for tho previous period, the decrease being duo to increased taxation,'-to'"higher'costs of deposits,, increaso. in bad .de_bts, and to lessened earnings'bif'our'short-terni iavestments in- London, '•■-'■■—-—

.•'-.'lt is, pf; course, not tci. bo. expected that a. new. record, of profit can bo made, every y bar, " said tho chairman. "Lean; periods' come sooner or later,' and/in common with other-nnancial institutions, wo.havo suffered from. tho. effects of the prevailing depression. Wo anticipate that our losses "from tho earthquake and resultant fires in Hawkea Bay last-February will amount to less-than, £,100,000. ■ When theso losses, have boon definitely determined, 1-he amount-will be debited to tho contingency, fund, in which .-there will remain a. very> substantial balance." -

Coin,-'.cash balances, and deposits .with bankers am0unt,t0,.£7,106,498, lie said,. a ft. increase-of £342)897 on last year's figures*- Money-.at-call and short notice, ttovernment securities and other-securi-Ijos in London, bills receivable in London and in' transit- were reduced by £823ji5?ijtlue to lower values for tho Dominions-produce.- ■ . British Kpd New Zealand Government securities and-securities of local bodies' amount .'to-£8,681,893. - These items were.well, under realisable value. Australian. .Government securities wero £3,548,443. ."These also stand in our books at lessthan market value," Mr. Watson remarked.' ...

Advances and bills discounted show a decrease of £709,374 over £400,000 of which"is'dub. to'reduced.'import's from Britain. " '

"There has been an active demand for money," "the chairman explained, "and we hav<rtsecir able to meet all legitimate ..applications, from our own customers. In time's like, the" present, it is necessary- to scrutinise all requests for •atfcommddfttion with-the greatest-care, not-only-to'guard-against' the possibility'of loss, liut also to see that our funds are not being used for speculative purposes, or for purposes alien to proper banking. "In 'the depressed "conditions prevailing, wn hnvo felt it to lio our duty lo meet our customers' needs right up

to tho limit of safety.; All advances on our books have been most carefully scrntiniscd,-and, bearing in mind that recovery from the present depression may be slow, all bad and doubtful debts bavo been amply provided for."

The dividend and. bonus, which are payable in Wellington to-morrow and at the various branches ou receipt of advices, will be at the same rates as those of last year. No change, by reason of the present abnormal exchange rates, is being made in tlio customary method of paying the dividend and bonus, that is .to say, they will be paid in the currency of the country in1 which- the shares arc .registered. The bank's deed of,: settlement permits of this. ■ " , .. ■'■ .^DIRECTORS AND STAFF. Refoirnce was: made by tho chairman'" to Sir George Elliot's -resignation .of the chairmanship before leaving for the Old Country. "Sir-George occupied -'the' 'chair'- for- nino years, and discharged the duties of thu position with advantage to the bank-and credit to himself," -Mr. Watson -observed; In mentioning.tho':dGath on 17th July last,.' Of-Mr. William Boe'(;"e,a member.of- the" board' for-iifteen- years, tho chairnian said: Mr.'lEeOco was' a uiost agreeable' colleague a'nd-possessed of considerable^ knowledge ofafEaivsi TheGovernnient appointed Mr.-. Eobert- ■. A. C.M.Gv,:;of'-Invui'curgLll,. for, tho, "uiit expired, :rcsiduc: of.: Mr.: Reeee's .term, of.. office.:. .Sir George Elliot, and Mr. Anderson.liad been.r.e<ippointed to.'the. board for a'further term of threa.years, from" 31st. -March, 1931.: " TJie. term of; onice,of:Mr. R. \\':. Gibbs, :onc .of :liie; two. representatives of. t-he-.0-rdinary-shiareholders, expired in. March: last, andlJie :was re-elected-unoppoised -..tothe position. :.:.'. : .: : ,;.:.-;I-':

■ Appreciation of the'services rendered by-the members of the/London board and: the local, directors in Australia was ; warjjily. expressed, by;tho -directors: Mr.: SVatson. said, that' last year .ho. obtained, eight mouths' leave and jiaid ■■■a. .a ..visit io;:tlio.- Old .Gtfuntry, -where, -during;- li is stay in. Ljondon,- he,was associated with the .London;board.;.....'■'Our .;. .business there,'/ ho .said,;," is .-conducted /with: pflicieiiQy, and one .can^rarely, call a£. th.e^oiflice .without meeting New Zealand customers ;WhQ ; : expxess.:. gratificatiou^a't the isory-ices {ind;,atten.tipii-received:t'i'oiri tke':.staff. X was glail t.o.haye tho-plea-sure of meeting and discussing.l aiffiairs with the directors in. London, and, "when jit Australia, jjyitK..Sir.., John,,. Higgius (u;d Sir, Henry"'Braddciii our -directors there.-'' ";.'■"■ i, ;■ '.-I--:;-.: ■;..'-. \- : •.-■;-;.-.->.

i Mr. ; A. ,P.. W.,.]?., Greon retired .from: the.-post of'-.chief;auditor.-after-six-years.'-gervicc in that capaej-tyj and the. ■Go.yernment. appointed Mr. A. L.-Hompton; in his stead. Mr. Hempton's connection with .the .bank: extended over a periqcl 0f..42 years, dujing.which he rilled many ji^pbrtant pogitipns, includ-ing'tho'se'.-of-.chief -inspoctpv and assists ant general .manager.- : .

"The directors again express their appreciation, of the work and conduct of Btaii,*.' "said, Mr.. Watson.. "The chief, executive,officers'-:and,branch- managers have, liad.-an' extremely trying -tipib,. and that condition will continue, until a normal state "of affairs is reached.. A bonus, similar to that-of recent years, has been paid to .members of the staff and other employees, of tlio bank. I feel.sure that", as hitherto, this payment will meet with J'pur. cordial approval." . • The chairinau subsequently moyed the.adoption.6f the report' aud balance-: sheet. . ,:, :. '["'... ~ ~,".' - ■ A MODERATE RETURN; Sir Harold Beauehamp, in seconding the motion/ congratulated Mr. Watson upon his appointment as chairman. Mr. Watson has been associated .witli the bank' as d diroctor since 1894, and his elevation to the chair placed a copingstone to the Jong and honourable career he had had as a banker; "in fact, I think he may now. be described as the doyen of the banker1.? of.-Australasia^" rouiaTked "Sir Haroicf.' The speaker said ho was sure shareholders would be gratified with the results achieved by the bank for the past financial year, especially when they took into, account the prevailing general: adverse 'financial and economic condition^.

.'The directors' ability to give the usual return to shareholders was in no email measure due to tho_ sound policy that lia'd b.e en. pursued in; th.c. .past—•. that';is;' -bj■-buiidrng.Hip .sul>s.tan.ti'a,rTe- ;- servos :and making tte.fullesi; provision, but of proffta for losses which'the bank lias sustained, from time to time.

"The dividend'and. bonus W the eyes of: the pub-lie may appear large," qb-. served- Sir1 Harold, "but I would, .repeat what lidsTbeori ofton'.Hientionea'at'gath--prings sucn as this I—tKat1—tKat return repre-' sents only, a moderate one iipoii.the actual resources of'tho bank: Tf..those, factors aro, considered, t.his, ,r- return would-represent-•jiot more 'than, say, 7 per cent, upon theXotafof shareholders* funds;'employed.;''' ■'. _'..,'., ''. '.''....". ".'.'... ■ The report;and l3aiaii.ee.-shcet;. were' adopted- without vdiscussion.■ ; ." ; ' '. •; 'Mr.- Richard "•'W'. Gib'b's,']iii. retaining; thanks for a further extension of 'office,. remarked '.that;-ifr'was needless' to. say. tlip'- duties during" the past year had been' no sinecure, and the, problems, which',: had''presented /themselves, day; by day had been quite out of tha prdin-. ary, .and-so had-been all thp more in-, teresting. ."ISo: far, however,; ''.they, had rA>V;-prove:d; insurmountable, and:thfereBiilt of. the-year's "Work, as'iiiseipsca by; the- balance-shoot,"-should," ho thought,, prove gratifying' to shareholders! . "The board eau, of coursej lay down the policy to.befollowed,'' Mr.,Gibbs. continued,'" but' -without; the ~lx>yal-. and intelligent 'co-operation 'of its officers, thfcse satisfactory'''results ' could" not have been' achieved.'.' Thoso of you who come into touch with .our men in your varioxis business capacities will, I feel sure; agree, with "me that we; have an Excellent staff. Second tonoiie-^-parddn: my pride,- but..y.Qii know, until quite recent years,-!. ;was one of them. -The general manager's ' virility is" ' well kiiowirtb you,'ahd: with advancing years and. added responsibilities, .thorp is riff abatement in his resourcefulness and zeal in your interests." ; ...:... ■: -SHAREHOLDERS' THANKS. ; jklr.' A.-'-E.-Mabiu moved on behalf of the shareholders a hearty vote of thanks to the -directors, the general manager, and staff of the bank for their services during the past year. The chairman, in his not at all depressing speech, had. told Shareholders of the hard times New Zealand had been experiencing, and there was no doubt that the world' as a whole was going through a very strenuous time indeed. Everything—financial, commercial,, industrial, agricultural, and politica-1— seemed to have gone awry, and the highest economists' in the world had not been able to-find the cause thereof; but" all wfcro looking, for a silver lining or streak of light which would come to a rather harassed, world. And, as the chairman and Sir Harold Beanchamp had said, that change would ..surely come. As' sure' as summer followed winter,:tho change w.oulcl come. The laws of economics worked very slowly but surely, and everyono would possibly emerge far wiser, but possibly poorer and sadder men. In times such as the present it was far more necessary and right that shareholders should pass a vote of thanks to the staff for their services.' They passed votes of thanks very freely year by year, and they were really'thankful to the staff for its work during a year such as tho past one.

Mr. Mabin also said ho was very pleased to see Mr. Watson occupying tho chair. Ho had had the privilege of Mr. Watson's friendship for very many years, and as Mr. Watson was reading his thoughtful and instructive address he could not help thinking that tho chairman had arrived at tho Indian summer o.i! his years—full of years and honour and all his activities and powers unimpaired.

"Your long years, and experience in banking finance, sir, and what might.

be termed your solid and determined character; also- close association, with the affairs of the Dominion in tho past when crises had occurred will bo of great service to tho: bank at the present time, and you will prove a very valuable co-adjutor to Sir Henry Buckleton and the board. "As to Sir Henry Buckleton," Mr. Mabiu concluded, "I would like to- say that while we sympathise with him in his troubles at the present time, it is a great comfort to-the shareholders-to see him on deck standing up to all thewinds that blow. Sir Henry lived in a life of drafts and overdrafts, and while the. economic blizzard was exhausting itself it was some comfort to see him with both' hands on tho wheel, endeavouring. to steer the ship into port. We all recognise that tho whole of the bank's excellent staff were true, and loyal and have done their work in this bad year just as they had done it in past j-ears. when things had been easy and prosperous," Mr. 1. P. Blundell: "I have very, much pleasure in seconding the vote of thanks, and I thoroughly endorse all that has beO)i said." L ' « The vote was carried with acclamation. ' " ". ' ■ ' ■ "The chairman,.iii returning thanks, assured shareholders that, their vote was', very much appreciated. In a large, institution -such as the Bank of New Zealand the duties w/ero- very onerous,especially- those-of-;the'chief executive", officers, and iv the. present trying times of business-depression, it. was a: greatgratification ■ and. support to the direc-tors--that they-possessed-the confidence of the shareholders:';;..:. ■■' • ■ -•■: ': Sir-Henry "BuekletoK returned thanks: on behalf oftthe..stai r saying: "We are passing: through very ' difficult times indeed; but I can assure you that • I aiid. every member- of .the staff are doing our utmost"to-.protect and advance the interests of"thc."baiik." '■ This concluded tho .meeting.