BANK OF N.Z.

Evening Post, Volume CXIII, Issue 142, 17 June 1932, Page 11

BANK OF N.Z.

REDUCED- PROFITS

LOANS TO GOVERNMENT

THANKS TO STAFF

The annual meeting of the Bank of New Zealand was held at the Bank today. Mr. Oliver Nicholson, chairman, presided, and' there were also present Sir George Elliot, Messrs. William Watson, B. W. Gibbs, E. A. Anderson; C.M.G. (directors), Sir "Henry Buckleton general manager, and A. L. Hompton,'chief auditor. There was a full attendance of shareholders.

In moving the adoption of the repon and balance-sheet (as already published in "The Post"), the chairman paid a high" tribute to the able manner in Tfjhich his immediate predecessor Sir. William Watson had discharged his duties. In passing, he said he was glad 'to intimate that it was Mr. Watson's" intention to again offer himself for re-election as director representa-' tive of ordinary shareholders. The "chairman alsa apologised for the absence of Sir Harold Beauehamp, who had been granted leave of absence to visit Europe. During his stay in London Sir. Harold would be associated with the London Board of the bankThe chairman again expressed appreciation of the services rendered to tho bank by the chairman and members of. the London Board, and .to th:e local directors ;in Australia.

„,„ ±11 Australia. Before proceeding to review ■balance-sheet, the chairman explained that it was expressed in New Zealand currency, and no special provision had been made for the difference in the currency value,of the net assets in Australia caused by the adverse exchange Tate, as the appreciation in sterling assets in London was greater than the depreciation in the net assets in Australia in 'so iar as these were- affected by the exchange rate. Shareholders': funds in the bank were:—Paid-up capital .(exclusive of £.529,988 of guaranteed * stock), £6,328,125; reserve fund, £3,575,000; balance of prqfit carried forward, £395,056; making in all, £10,298,181. In. addition, there were internal reserves which, although less than last year, were still most ample^ Notes of the bank in, circulation at 31st March amounted to £4,062,762-— a higher figure than usual owing to increased demand consequent on the Easter holidays. The average circulation for the year was £3,523,753. Tho Government had extended, until 10th January, 1935, the period for which the note :issues of the banks in New: Zealand "were to continue as legal tender, snbject, however, to tho proviso that if, by an. Act of the General Assembly, a Central Reserve Bank be established -in New Zealand^ such notes shall cease to become legal tender not earlier than1 six months after such Act has been passed. ' DEPOSITS IKCKEASE. Deposits show a decrease for the year of v£ 758,842. Non-interest bear-. ing deposits are less by £203,290; interest bearing have increased by £734,204, and. Government deposits lave been reduced by £1,289,758. Mr. Nicholson, made- some remarks, ■which are referred to elsewhere, on the money "locked-up" in deposits. Continuing his Toview of the balance sheet he explained that a- decrease of £688,380 was shown in the-item "Bills Payable and Other Liabilities," a great portion of -which- was.' fluei to .a- transfer from contingency account (included "in '.'Other liabilities") to meet the heavy fall in tho market value at September last of the Banks'lnvestments. These investments, however, had since "(with, the exception of the holding of New Zealand Government securities) more-than recovered the amount written off in September, but the directors had not thought it necessary to restore the amount withdrawn from tho contingency account. The latter account had also been ..drawn on to provide for losses resultant 'from tho earthquake in Hawkes Bay in February, 1931. There remained a substantial balanco in contingency account. \ The profit for tho -year was " '£587,023, being £258,790 less than for the previous period, and £361,511 less than for the year which ended 31st March, 1930," a reduction" of 38 per :cent, as compared with tho 1930 figure. EFFECTS OF DEPRESSION. "It will be gathered from these fig- • ures that this bank Ma shouldering its full share of the effects of the severe- depression -which has come upon , the country," Mr. Nicholson proceeded. "Our large connection with the pastoral industry, which is suffering more than any other, has necessitated - our providing for considerable present and prospective losses, <but we are not without hope from our past'experience in this direction that much of the provision made will,1 on any material improvement in prices taking place, be recovered. . I "There is an. increase of £590,742 in the item 'Coin, Cash Balances, and Doposits with Bankers.' Money at call and short" notice, Government securities, and other securities in London, bills ' receivable in London and in transit are "' less by £91,104. Investment's are distributed as follows:—British and New Zealand-Government Securities and Securities of Local Bodies, £8,212,715^ . Australian Government .Securities, £3,647,732. : "The market value of these investments is largely in excess of the above '"■•figures, and the face valuo is still larger, so that if we do not require to t. sell the investments before "maturity there will bo a very considerable surplus on those items. Our holding of New Zealand Government securities ■was increased by £1,215,425 in tho form of Treasury bills,- and wo have agreed to make further and very sub- .. Btantial advances to assist the Government through its present financial difficulties. Yon will observe that our most readily realisable assets total £24,199,749—a very strong position in- ; deed. "The decrease of £2,746,893 in-ad-vances and bills discounted reflects the depression through which, the country is passing." The chairman's comment on the ad- ■ vances will be found under the heading of "Bank.and Public." In referring to undistributed profit, Mi\-Nich-olson said: fit has been the'policy of the; board to build up tho amount of --undistributed profit carried forward from year to year for the purpose of ..making a provision for the maintenance of the usual distribution to shareholders when times of stress are experienced. It was foreseen that sooner or later these times would inevitably arise, .and .unfortunately tho year under review has come within this category. "The accumulated balance of profits carried forward from 31st March, 1931, ■ was £626,001, a sum far greatet thau is shown by any other bank in Australia or New Zealand, indeed greater in proportion than that of most British banks. EQUALISING: DIVIDENDS. ".Under tho bank' 3 deeft of settle ment it is provided that tho balance of profit carried forward each year to tho profit and loss account ghall bo held -r'for the purpose of equalising future dividends. 3 ? This year the dividend has ben fixed at 14 "1-3 per cent, on tho ordinary shares instead of being doclared as a dividend of 13 1-3 per cent, "with, a bonus of 1 per cent, as heretofore distributed. Shareholders, by reason of the very large amounts carried

forward in previous years, have not had distributed to them by way of dividend the full'amount then available for the purpose, and it appeared to tho board that as full provision for the year had been made for all ascertained contingent and possible losses, it was its bounden duty, in view of the provisions of the deed of settlement, to mako this year a partial distribution of such accumulated profits so as to enable a distribution of a similar amount to that made in the last few years.

_ «^.v> j<ißi lewyeaia.: "There are 6976 holders of ordinary shares in the bank. Of these, 2445 shareholders/each hold 100 shares or under, and 1384 hold between 101 and 200 shares. Many of these shareholders ~are. elderly people of limited means to whom every pound of incomo is of importance. NEW ZEALAND OURBENOY. "Last year the final dividend and tho bonus wero paid in accordance with the shareholders? resolution in the currency of the country in which the shares were registered. Some of our shareholders on the Australian registers took exception to payment being made in Australian currency, and their complaints ■ were submitted to counsel who advised that distribution of profits must be made onjy in New Zealand currency. - Australian shareholders were, thereupon- paid the premium which New Zealand-money, was worth in Australia, which; adjustment, I feel sure, will meet with your approval. It is a matter of regret that shareholders on the' London register will receive their dividend in New , Zealand currency, but in view of the legal position no, other course is open. - "The final dividend, which will be at tho following rates, will be payable in. Wellington to-morrow,; and at tho various branches on receipt of advice: —<C* long-term mortgage shares, 6 per cent, per annum; 'D J long-term mortgage shares,. 7i _per cent, per annum; preference shares, 10 5-33 'per cent, (making 13 2-11 per cent, for the year); ordinary shares, 7 2-3 per cent, (making 141-3 per cent, for the year). "In order to obtain a true perspective of the rate of interest earned by the bank, consideration must be given to the amount of -the effective 'funds of the'shareholders employed in earning tho distributable profit;' On this basis the net profits augmented by the sum taken from the amount carried forward in previous years represents a rate of interest not in excess of the ruling rate prevailing in the ordinary field of investments." ■ The' chairman referred to the Dominion's economic position; taxation of the Bank of New Zealand and banks in "general in New Zealand; some misconceptions and criticisms of the banks and their services-rendered to the public j the Economic Conference to be. held at Ottawa, and some other topics of general interest, •which are reported in full elsewhere in this issue. - Before concluding tho chairman referred! to .the efficient, services rendered by the staff during the yeai- as "deserving of our acknowledgment and appreciation. Naturally, the trying times the ' country 'is experiencing •throw extra responsibility and work on the chief; executive .officers and branch managers. The annual contribution to the" pension' fund, which is based on the salaries paid, has been "made as usual, the amount being £36,103." Mr. William 'Watson, in seconding the motion, thanked tho chairman for his .kind, remarks regarding himself. He ,'had.' pleasure •in seconding the motion for the adoption of the report and balance-sheet,', and congratulated shareholders on the strong and sourjd position of the bank which enabled it, in these trying times, to carry on its usual" legitimate business as well as to assist tho Government in its present unwonted needs. " -The- report and balance-sheet, were then put to the meeting and were unanimously adopted. EXPRESSIONS OF GRATITUDE. Mr. A. E. Mabin, in moving a vote of thanks to the chairman and directors, and the general manager and. staff for | their services, during the past year, said the chairman in his very interesting address had told them all they had gone through; and really it had been a rather exciting year, : First of all there i was the , departure' from the gold standard by.Great Britain—a position that none of them thought they would 1 live to see; -but still it had occurred. The financial-position in all other parts of tho world , became ' -such that, if finances had'not been wisely handled, chaos would have followed. They had during a number of years past experienced an. extremely low level of prices for wool and products of the soil generally, bringing with it a "slide" in the value ;of real, estate. There had also beenV legislation imposed upon them, which had been submitted to willingly, of a'nature at which they would have stood aghast'a few years ago. Traders had,<also had 'restrictions imposed on themisueh as they had never had imposed on them before. They had, however, not found the restrictions at all irksome. So far as the export licence was concerned they had lived during'tho~ year to see tho great battle of the exchange. That was, more or less, the black side of the picture The bright side" was that they all had their backs down to it —-the. Government, J;he banker, and tho merchant— with an endeavour to find a way out of -the present difficulties. It was a matter 'of congratulation that largo as well as small mercantile institutions throughout New Zealand had stood up to the strain. Financial institutions had been ablo to continuo support to the "farming and industrial communities. \The Bank of New Zealand and the National Bank had been able to. give largo financial assistance to the Government.1-That was . all.to tho good; but it had undoubtedly thrown a great burden upon' the executive officers of the bank and tho board. To the general manager and/his executive officers tho year must i have been a very anxious and trying one indeed. Tho speaker said, therefore, on the present occasion tho special thanks of the shareholders were due to the board and staff, and he specifically mentioned the general manager (Sir Henry Buckleton) for his. able management of the bank during tho year, for his burdeiimust have been very heavy, but he had stood up to it very well indeed. The thanks of the shareholders wero also duo to all the various branch managers in New Zealand, London', and Australia, and, indeed, to every individual on the staff of the bank. Their devotion to the bank.'s Beryico was proverbial, arid, as the chairman had pointed out in his addi'ess, that devotion carried with it service not, only to the bank itself but also to tho State and the whole community. Mr." A. D. Crawford; in seconding the motion^ said he'would like to thank the management most sincerely, and he was sure he was speaking for all the: shareholders, on the/results of tho year. It was a great pleasure to feel that there were some. institutions in this country that had. not' gone back so far as others. Mr. Crawford instanced the surprise occasioned by the remark made in his presonco of someone who had seen '' three good balance-sheets." One of them, ne was pleased, to say,"was that of the Bank of, New Zealand: There was one other point he, would like to mention and that, was taxation, as referred to by the chairman. Taxation had to be paid not only by the banks' but by everybody. It had become very, heavy indeed. "I would like to ask you a question on that"pbint, sir, aid. it is this: Have youL ever known taxation to b© reduced?" (Laughter.) He. had been working hard in New Zealand for tho Hist fifty years, and had never known it to be reduced. But it was not only taxation: rates, too, were never reduced. Ho hoped those in authority would point out to the Government that

it was absolutely essential, if they were to carry on successfully, to have taxes and rates reduced. The balance-sheet had given ■: shareholders considerable encouragement. - He had great pleasure in seconding the motion. ' Mr. Boocock said the thought had ■come into his head during the remarks on taxes and; rates, if Dr. Copland could suggest any way of reducing or abolishing taxes altogether. (Laughter.)

Mr. Len Mackenzie also thanked the chairman and directors for the able stand. they had taken against an increased exchange rate. Last year had been a very trying one to the board. Shareholders who attended the meeting must realise the heavy , burden which w had been borne by the directors and general manager of the bank. He desired to pay a tribute to the courtesy of the London office to all overseas visitors. The London office was doing an immense amount of work, both financially and socially, with respect to visitors from New Zealand, who were made to feel that the branch was like a home. He thanked the chairman for the words of advice he had given to the people of New Zealand as to the need for economy in the future. "We all know we have'to-make ■ economies (he said), but I think the people who are making the most'fuss in regard to the assistance they have been called upon to extend'to their feliow:workers are some of the themselves." .

He referred to the restrictions imposed upon trade, and expressed the opinion that traders had met: the restrictions and had not complained of the demands made upon them in that regard. He agreed with all that Messrs. Mabin and Crawford had said regarding the TJoard. ; (Cheers.) • The chairman, in acknowledging the vote. of thanks, said that he and the other members of the board fully appreciated the kindly references made to their services, and shareholders might irest assured that the best services of the" directors would Be given to maintain the prestige and continued prosperity ;of. the bank. (Applause.) -' Sir Henry: Buckleton,.-in responding on behalf of the staff, said the remarks

just made and the vote of thanks were much appreciated. It had been pointed out that in times like the present a great deal of extra work and worry was • cast upon the executive officers of the bank. "We, of course,

look forward to hav'.ng good times and bad times and we must take one with the other; but it was hard on us that we have to do a lot of extra work and bear a lot of extra worry and yet make much less profit for the bank." While profits were coming down, he added, i:axation had gone up very much indeed. He would liko to stress the point that a large amouut of the profits was , derived from non-taxable securities. They had paid taxation amounting to well over £600,000. Before they could do anything for their

shareholders .they had to provide £2000 a day to meet taxation. He wished to have recorded his "personal appreciation of < the ■ services rendered to the

bank by other chief executive officers

who had had a very trying time; also the branch managers who had likewise

had an arduous time. Thoy had given I most loyal and valuable service, and .he .could assure . shareholders that in the future, as in the ppst, they would givo, their most unremitting attention to furthering the interests of the bank. (Applaujc.) ~ . .This was' all the business.

Remarks made by the chairman on the Central Bank proposal have been held over until to-morrow owing to pressure on space.