BANK OF NEW ZEALAND

Evening Star, Issue 19893, 15 June 1928, Page 9

BANK OF NEW ZEALAND

ANNUAL MEETING OF PROPRIETORS Tlie-annual meeting of proprietors of the Bank of New Zealand was nek at Wellington to-day, Sir George Elliot presiding. , In moving the adoption of the report and balance-sheet, the. Chairman stated (inter alia) “ The paid-up capital of the bank now stands at £0,241, 21U. Die difference between this amount and that shown on last gear’s balancesheet—viz., £242,012, is explained by the payments made by shareholders on account of long-term mortgage shaics. In addition to this capital there is the guaranteed stock of £529,988. The stock will mature . m 1934, and it is the present intention of the directors to pay it off dt its. maturity. The reserve fund, with the additions now proposed, plus £824 13s lid premium received on fractious of and unallotted D. , long-term mortgage shares sold by tender, will amount to £3.150,000. and the balance of undivided profits, after payment of the dividend, will be £582.525. These items, capital, reserve fund, and undivided profits, total £10,503,723. This largo amount must bring to depositors and other creditors a comfortable assurance of the great stability of the bank. PROFIT AND LOSS ACCOUNT. “ The profits for the year have been swollen by £73,510 surplus on realisation, or on maturity, of Government and other investment stocks. The actual net earnings from the ordinary bisiness and the long-term mortgage department are £3,793 less than the previous year, notwithstanding the fact that the bank has had the use of an extra average amount of £403,235 new long-term mortgage capital. This falling-off of profits is due to a reduction in ' advances, to increased payments of interest on deposits, and to increased operating expenses. A diminution, of ordinary earnings was. anticipated, and shareholders have been warned from this chair, on more than, one occasion, that in the future it would be difficult to maintain bank profits at a. level equal to that of the past few years. Banking i£ just as sensitive to dull times as .any trade or profession, although a casual examination of balance-sheets might not bear out this contention. I would remind you, however, that a bank takes advantage of times when trade is prosperous and profits are largo to make provision tor losses which are inevitable when the pendulum swings the other way. Taking into consideration the heavy losses sustained by the Bank of New Zealand since 1920, occasioned by circumstances beyond the control of the directors, it is safe to say the balance-sheet presented to you to-day would not have been such pleasant reading had ample provision not been made in the past for contingencies that might arise. It has again been considered . advisable to make considerable provision for doubtful advances, but it is hoped that a fair proportion of tho provision so made will ultimately not be required. DEPOSITS. “ There has been an increase m interest-bearing deposits of £1,279,1304; whilst non-interest bearing deposits decreased £604,595; tho not increase for the year being £675,009. Tho proportion of non-interest bearing to interest bearing deposits held by all the banks in tho dominion has, for some years, been steadily, decreasing. For the March quarter, 1920, non-interest-bearing deposits represented 69 per cent, of tho total deposits; whilst for tho same quarter m 1928 tho proportion shrunk to 49 per cent. Tins is a Factor seldom taken into account by persons who adversely criticise the increased rate of interest on overdrafts; increased cost to the banks of deposits necessarily means a higher lending rate. Our liability on deposits in proportion to the shareholders’ funds is lower than in tho case of most Australasian banks. : ADVANCES AND BILLS DIS- ’ COUNTED.

“Tills item shows, u reduction ol £1,170,700, duo, partly to the reduced imports, and partly to the increased revenue of our farming customers. An impression appears to have gained ground that the bank has been restricting credit; there is no foundation for such an impression. Our resources are, and for many a year have been, ample to meet all the legitimate demands .of our customers. Our very large investments in Government and local bodies’ securities enable us to find funds at short notice wherewith to take up all satisfactory advances offering.” Mr Win. Watson, in seconding the motion, said that it had been stated that, ns the interest rates were raised owing to the imports exceeding the exports, so, now that the position had fortunately been reversed, (lie bank should immediately revert to the former rates. 'The facts were that the resources of the bank were quite sufficient to cope with the temporary excess of imports without raising the rates of interest on advances; but the increased rates would not have been forced upon the banks but for the competition of the Post: Office Savings Bank by that institution’s departure fronr recognised savings bank business. The Savings Bank h(id recently modified its terms,, although not altogether to the extent of reversion to the former position. For the correctness of these remarks, ho had the authority of the chairman of the associated banks. The report was adopted.