BUILDING SOCIETY

Evening Post, Volume CXXVII, Issue 69, 23 March 1939, Page 11

BUILDING SOCIETY

THE METROPOLITAN

STRONG RESERVE FUND

Satisfaction with the result of the society's operations in the past year was expressed by the chairman of directors, Mr. Gordon, J. Reid, who presided today at the forty-eighth annual meeting of shareholders in the

Metropolitan Permanent Building and Investment Society. Mr. Reid announced that the board of directors felt that, without jeopardising the future, the position was sucli that' a bonus of 1 per cent, could safely be paid in addition to the usual dividend.

Associated with Mr. Reid were . his co-directors Captain J. E. Dawson, Mi:. James Marchbanks, and Mr. Alfred Longmore, and the secretary, Mr. L. Roskruge. The fifth director, Mr. Robert M. Jack, was unable to be present owing to. absence from town.

Mr. Reid, in moving the adoption of the report and balance-sheet (reference to which' has been made previously in "The Post"),. said that the position of the society had not varied materially since the last annual meeting. In the minds of those conversant with the mortgage business there was a certain amount of apprehension about the future, but he felt confident that with the careful of business and with the support of the society's reserves, the society would continue to function satisfactorily, and the prudent policy of the past would manifest, its true worth. Referring to the deposit account, Mr. Reid said that the figures showed a decline of £7000. This was due chiefly to the withdrawal of funds in deceased persons' estates. "SELF-DENIED DIVIDENDS." Speaking to the motion for the adoption of the report and balance-sheet, Mr. G. R. Baudinet suggested that, under the present circumstances in New Zealand, it would be wise to distribute as share capital among shareholders the substantial reserve fund that had been built up. The reserve fund was now roughly £50,000, which was greater than the amount of the fully paid A shares, £40,000. Mr. Baudinet added that he made the suggestion for the wellbeing of the society. Times had changed, and today a fresh outlook on. things was necessary. The substantial reserves might be described as consisting of self-denied dividends, and his view was that they should show shareholders some return. Replying, Mr. Reid said that the directors already! had this matter under consideration, but owing to the present state of finance generally they had decided that the time was not opportune to do anything. The directors were considering the further issue of A capital shares to shareholders on exceptionally favourable, terms, also the re-issue of B contributing shares. Dealing further w,ith the question, of reserves, he said it must be readily agreed that substantial reserves were pillars of strength to such institutions as the society. There appeared to be a tendency on the part of Mr. Baudinet to depreciate care for the future. The/ future could not be ignored! The society had never aimed at spectacular feats or lavish outlay and in consequence had been better able to weather the financial storms* which had blown up during its existence. "While reserves are set aside primarily to cover losses in the mortgage account," continued Mr. Reid, "they reflect in several other directions to the ultimate advantage of shareholders. Shareholders receive benefits from the earnings of those funds, in the absence of which dividends must necessarily be lower, which in turn would tend to lower the market price for those disposing of their holding. , The presence of solid reserves affords depositors better security for their funds and it would be well to remember that, without a good supply of deposit I moneys, there must follow a substantial contraction in the amount of annual profit." » I Mr. Reid added that it had always been the policy of the society to proceed with caution, and in pursuance of that policy reserves had been built up which would help the society to remain solid and steadfast in times of financial stress. "I venture to say that the policy of solidity, as pursued by your directors, should meet with the whole-hearted support of all shareholders," he continued, "and I am indeed surprised that we should have even one shareholder who is not in agreement with what is, to my mind, a very wise and prudent provision." After Mr. Reid's statement, Mr. Baudinet said that if it had been made previously he would not have made his move. SAFE AND SOUND POLICY. Mr. R. L. Macalister said that the society owed its fine position today to the safe and sound policy that had always been followed by the directors. The society took a very moderate sum in deposit moneys in comparison with its assets, and that was why the dividends were not always as great as Mr. Baudinet would like to see. Mr. Robert Fleming congratulated the directors on the results achieved. Every business throughout the country, he said, was feeling the pinch of revenue growing less and of expenses growing more. He was astounded that Mr. Baudinet should "Uggest a dispersal of the reserves. The breakneck speed being travelled in this country today called, in his opinion, for high reserves. Mr. Marchbanks said he did not think there was any doubt at all that the society should have solid reserves. He would be very much averse to any dissipation of the reserve fund.

The report and balance-sheet were adopted.

In accordance with the rules Messrs. Jack and Longmore retired from the directorate, but offered themselves for re-election. There was a third nominee, Mr. Baudinet. A ballot was taken, and Messrs. Jack and Longmore were re-elected.

Messrs. Henry Kember and Son and Mr. W. S. Wheeler were reappointed auditors to the society.

The meeting closed with a tribute to the efficient work of the secretary and his assistant.