PRODUCE & MARKET REPORTS FROM DAY TO DAY

Evening Post, Volume CXVIII, Issue 57, 5 September 1934, Page 12

PRODUCE & MARKET REPORTS FROM DAY TO DAY

UNION BANK

COMPETITIVE EXCHANGE

GOVERNMENTS AND BANKS

(From "The Post's" Representative.) LONDON, August 4.

The lion. Edmund W. Parker presided at the annual meeting of the Union Bank of Australia this week. The business of the bank, he said, had continued to bo very difficult and profits hard to earn. The continued reduction in the rates of interest charged to borrowers^ still cut heavily into earning power. The heavy discount at which the Australian and Neiv Zealand currencies still stood in comparison with sterling continued during the jxvir to make the exchange business difficult, while intensive competition had reduced the margin ot profit on such business to an insignificant percentage. In consequence the profits from this side of the bank's business had been seriously diminished. Notwithstanding these drawbacks he hoped shareholders would consider the balancesheet satisfactory. The net profit, after providing for all bad and doutbful debts, amounted to £203,509, and adding the sum cf £100,523 brought forward, gave £304,032, as compared with £200,523, the corresponding amount last year. Out of that amount available they had declared .1 dividend of 3 per cent, for the halfyear, which, with the interim diivdend ilready declared and paid, made 5 per cent, free of tax for the year.

"In dealing with the balance-sheet figures," the chairman continued, "it wiil 'be observed that our general business has expanded, the total figures having increased by £3,352,000, as compared with a year ago. Deposits at -£38,448,000 are '£3,232,000 higher, and there are also increases of £56,000 in < circulation and £59,000 in bills payable. On the assets side .there is a decrease of £75,000 in money at call in London, but the balance of remittances and drafts in transit shows au increase of £719,000. This is an indication of a larger volume of exchange business, as a consequence of increased exports from [Australia. Bills discounted, loans', anil other securities are higher 'by £909,000. TREASURY BILL HOLDINGS.

■ "This movement is due to two factors: an increase of £2,000,000 in our holding of Australian and New Zealand Government Treasury bills and a decrease of £1,100,000 in our advances. This latter movement is uot due to any! restrictive policy on our part. On the contrary, we are more than ready to make sound banking advances against adequate security; but the limited demand for accommodation of this character has obliged us to employ more of our funds in the less remunerative sphere of Treasury bills. Our liquid assets amount to about Ss Id in the £ of our total liabilities to the public.

"Our gross profits show a falling-off oi £06.000, but this is offset by a decrease of £00,000 in our expenses, the net profit being only £6000 less' than last year. London expenses show a small increase of '£1000, but salaries and general expenses iv Australia and New Zealand together show a decrease of. £8000. "The large decrease of £83,000 under the heading of taxation is mainly owing to the fact that this year we have not had to provide for any substantial increase in reserves against taxes assessed but not paid at date of balance-sheet, and, in a lesser degree, to decreased earnings. A further transfer of 100,000 has been made from the reserve fund to currency reserve. This has been rendered necessary by the compulsory acquisition of the bank's good holding under the terms of the Reserve Bank of New Zealand Act, 1933. NATIONALISATION. "You will have noticed/ continued Mr. Parker, "that certain particular parties in Australia have put in the forefront of their programmes proposals to nationalise the banks. These proposals must, in niy opinion, be opposed by all'the banks with the utmost vigour, if they were carried through 1 honestly believe that it would be disastrous to the country as well as to the shareholders of the banks. The supporters of these proposals allude to the large profits earned by the banks, but they completely ignore the heavy sacrifices made by the shareholders to create the reserves held by the banks; which reserves have been formed out of profits which justly belong to the shareholders and which would have been distributed to shareholders as dividends had they not decided to provide for rainy days and for the safeguarding of their depositors." The chairman then quoted trade figures from Australia and New Zealand, and, referring to the New Zealand Reserve Bank, he said: "I can only hope that it will prove a success and be of assistance to New Zealand and the banks trading there." GENERAL MANAGER'S VIEWS.

Mr. W. A. Leitch, general manager, said that except for wool it could not be said that any of their industries were in a better state than two years ago when he was last present at the'annual meeting of the shareholders, and the man on the land was still failing to get a return sufficient to cover his costs1. Climatic and economic conditions were not the only troubles with which they had to contend in Australia and New Zealand, but during the whole period of stress it could bn claimed for the banks that they had buttressed the financial position in such a way as must have commanded the approval of the community as a whole. In the impending Federal election he believed that any political party with "Nationalisation of the Banks" for its election cry. would soon find the sanity of the people a difficult obstacle to contend against, but .it was a cry which the banks could not afford to. ignore.