BANKING RETURNS

Evening Star, Issue 20688, 10 January 1931, Page 12

BANKING RETURNS

EVIDENCE OF CURTAILED INCOME

BUT POSITION SOUND [Bv Our Special Commissioner.] , WELLINGTON, January 9. The December quarter returns of the six banks trading hero show evidence of the reduction in exports for the year, and consequently do not show as favourable a position as those of a year ago. Deposits are reduced by practically two millions, while advances have increased by about half a million, and the result is that there is an excess of advances over deposits of £3,009,332, as compared with £131,098 a year ago. This movement was only to be expected in view of a reduction in the excess of exports over imports of £3,600,215 for tho year ended November 30 last, the latest figures available. This reduction in our trade balance was hound to affect the banking figures, but lias not done so to the full extent of the trade reduction. The December quarter is always the one showing the banks’ funds at the lowest point, as demands for accommodation to move the season’s produce are heaviest in that period, and tho realisations from onr exports do not come in till the next quarter. The excess of advances, although a moderately heavy one, is not excessive, and has been decidedly heavier on some previous occasions. Below is a comparison of the principal features in tho latest returns with those of tho previous quarter, showing the changes in the three months: —

Fixed deposits have increased £1,028,289 at the expense of the free class, which has a reduction of £2,205,332. and there is a steady tendency towards an increase in fixed deposits. Advances and discounts together exhibit a growth of £1,875,847, which is a natural movement for this time of the year. Metal holdings show a light increase, and the note circulation is a little heavier. Government deposits exhibit a severe contraction. However, these are only the three months’ movements, and a more useful comparison is to bo bad by comparing tho present figures with those -for the corresponding period of earlier years. Wo take first the deposits, winch show the following fluctuations in the past five years:— FIVE YEARS’ COMPARISON.

The growth in fixed deposits following on the increase in the interest rates in 1927 is clearly shown here, and the present total is fully o 0 per cent, greater than 4 years ago. ’llns growth has naturally affected the free class, and this shows the lowest total for some thirteen years. The total of the two classes together, however, is still high, being only £288,010 less than two years ago, although nearly two millions lighter than a year ago, the banks have, however, found a full outlet for the utilisation of these funds, as will bo seen from the following comparison of the advances for tho past five years:— —Advances.—

Considering the general conditions prevailing in respect to our oiei&eas trade, the increase of £574,917 in the year is quite a moderate one, but the total is much heavier than iu earlier years, and is just on a level with the record total of June, 1921. In view ot the decrease in deposits the banks have had to keep a fairly tight rein on advances, and it is to their credit that they have allowed any increase m the face of the falling off in deposits. The best survey of these figures is obtained by comparing tho totals ot deposits with those of advances, showin<r the extent ot the bnnksV lendings in comparison with the deposits which provide the main supply of funds for lending; and this is as follows m recent years: —- DEPOSITS AND ADVANCES.

♦Excess of Deposits. It was only in tho Hush year of 1928, when exports were very much m excess of imports, that there was an excess ot deposits, and the present excess of advances is not as heavy as m 1927, 1 y-6, 1923 or 1921. As far as New Zealand is concerned, therefore, the present financial situation is better than in those years, and, if thought advisable, the banks could increase their lendings. However, tho outlook for this season s exports is nob very bright, with wool and dairy produce prices lower than for a long tune past; and. with the unsettled conditions prevailing iu Australia and elsewhere, it behoves the hanks to act cautiously. Government deposits at £1,809,10/ are £201,000 heavier titan a year ago, while the hanks’ holdings of Government _aml other funded securities at £4,707,977 are £‘680,468 less than a year ago, from which it would seem that the hanks are finding a more profitable investment. The only other features of general in-

terest are the metal holdings and note circulation, which compare as follow : —■

The decrease in note circulation is indicative of reduced spending power, and, probably, partly' the lower prices ruling. The reduction in metal holdings is due to the banks exporting some gold, as their holdings were heavier than was needed. The shares of the different banks m the deposits and advances arc as follow ;

It will be seen that advances are heavier than deposits with each bank. The Union Bank is the only one to show an increase in deposits in the year, while the increase in advances is all with the Bank of New Zealand and Now South Wales. Taken all round, the latest returns are very satisfactory, and show the banks to be in a sound position, and able to meet all legitimate calls for assistance. The increase in advances and the reduction in deposits is the natural outcome of the decrease in exports and the lighter trade balance. It also shows, however, that _ our spending power as a community is reduced, and with the low prices ruling for this season’s exports, it will be further curtailed. But New Zealand is in a sound position, and will rally again as soon as Australian and other outside conditions improve.:

Free deposits Fixed deposits Dec. Ouarlor. ... ... 32,773,5.17 Sept. Ouartcr. ,£20,803,171 31,747,203 Government deposits ... 1.859,407 3,000,100 Note circulation ... ... C. 133,388 0,039,175 Advances ... 53,214,071 51,399,840 Discounts ... ... ... 1,108,074 1,107,061 Coin and bullion ... ... 0.802,930 0,838,387

_ deposits,— December Ouartcr. 1930 ... Free. -£18,597,839 Fixed. ■£32,775,557 30,028,239 Total. 1939 ... 32,738,491 59,350,733 3938 ... 1927 ... 22,179,74b 21,438,333 29,481,058 24,202,722 51,661,400 45,701,057 1930 ... 23,131,103 21,105,510 44,236,049

December Quarter. Advances. Discounts. Total. 11)30 ... •Ck),214,074 £] ,108,074 ;{754,382,748 1020 ... '".’,3.(>12,487 ], 195,344 53,807,831 102S ... 40,810,084 4,290,490 48,101,104 1927 ... 48,087,788 1,671,870 40,759,604 1026 ... 49,3%,439 1,870,772 51,273,211

December Excess ol Ounricr. Deposit*. Advances. Advances. f030 ... v:r,j ,:(7.i,3ifo .£73,000,352 1921) ... ~l lit, Soli, 708 53,807,831 151,008 1J)0y 51,001,400 48,101,104 ♦•3,560,303 ]!)27 ... 1020 ... uj2r> ... •15,701,057 49,750,004 4,058,007 7,036,503 3,521,005 41,330,649 •16,030,303 51,373,211 48,554,437 302-1 ... •14.070,499 45,030,451 1,259,955

METAL HOLDINGS AND NOTES. Doc. Quarter. Coin and Bullion. XotoCircuIntion 15*30 .. ... £6,802,939 ,£6,133,383 \92'J 6,614,963 6.544,593 ]928 . 7,282,331 6,521,106 1927 ... 7,666,385 6.570,062 J92U ... 7,809,984 6,757,707

BANK FIGURES. liink. Deposits. W Zealand £24.656.497 Union 5,8S5,0S,> New South Wales ... C.185.8S! Australasia National 8,2u. ,.03 Commercial 1.580,333 Advances. £25,304,409 0,345,183 0,079,780 5,113,000 9,243,122 1,037,522