BANKING RETURNS

Evening Star, Issue 20996, 9 January 1932, Page 13

BANKING RETURNS

AMPLE FBNDS AVAILABLE A SPLENDID RECOVERY (From Our Special Commissioner.) AVELLINGTON, January 9. Notwithstanding the very lean year through which the dominion has passed, the banks are able to show a greatly improved financial position, and a decidedly larger holding of funds available for general purposes than was the case a year ago. The latest figures available are those of December 7 last, which show the banks to have an excess of deposits over advances of £543,766, compared with an excess of advances of £3,581,005 a year earlier. This shows that the general supply of funds held by the banks is fully four -millions better than was the case a year - ago, which is a remarkable recovery in view of the conditions ruling during the past year. This has been brought about by a gradual reduction in advances, of four millions, as the total of deposits is just ahead of a year ago. The main, factor in producing this result is the severe curtailment of importation, as the imports for the eleven months ending with November were £16,858,000 less than last year, while the exports showed a reduction of £10,156,000. This reduction in importation must have enabled importers to reduce their indebtedness to the banks, and so improve the general situation. The banks are usually taxed the hardest for funds m November, and from December onwards their coffers are replenished; so we may expect to see an improvement in the supply of funds available from now onwards till about June or July, due to realisations coming in from the sale of our wool, butter, cheese, and frozen meat, etc. The figures at present under review are the averages from the December quarter, which cover a period of gradual increase in demands on the banks up to November, and from then onwards a gradual replenishment of the banks’ coffers, which is continued on for the next, say, six months. We will now compare the average figures for the December quarter with those for the September quarter immediately preceding, to show the most recent movements. These figures compare as follows: AVERAGES—DECEMBER AND SEPTEMBER QUARTERS.

Free deposits have decreased a little, but the total of the two classes of deposits is £9,816 more, while advances and discounts together are £83,225 heavier, which is only _ the usual se% sonal movement, and is a very light increase. Note circulation is a little heavier, but is not up to the level of a year ago. Government deposits are at a low level. COMPARISON WITH PREVIOUS YEARS. These are only the seasonal movements in the quarter, and a much more useful and interesting comparison is that with the figures of the corresponding quarter _of previous _ years, which we give below. Following are the deposits for the December quarter of the past five years;—

The total shows a light decrease of £592.363, but the free class is £2,452,40T lighter, while the fixed increased nearly two millions. Fixed deposits are now some 68 per cent, of the total, compared with 53 per cent, in 1927, showing an increase of over ten millions in four years; while the free class has receded five millions. There is a very marked tendency to place money on fixed deposit in recent years. Turning to the other side of the ledger, we see that the advances have been reduced over three millions in the year and are now at a lighter level than m the two previous years, and slightly less than in 1926. Following are the totals for the past five years: — —Advances.—

A reduction in the total of £3,366,000 in the year is very good. This is probably due mainly to restriction in importation and consequent reduction in stocks of imported goods held; also the general lower price level is a factor in causing this reduction. The latest total is practically on a level with that of 1926. DEPOSITS AND ADVANCES COMPARED. The main feature of general interest in these returns, and the most important comparison, is that of deposits and advances, showing the relationship of these two main controlling factors of the money market; and these compare as follows for the post six years: December Excess of

The changes in the general situation in the sis years arc very interesting, and, apart from the flush time of 1928, when deposits were well in excess of advances, the latest returns make the best showing for the past ten years, or even longer. The December quarter always witnesses the heaviest calls for assistance from the banks, and is the period when funds are lowest pending realisations coming in from the season’s exports. This year, owing to reduced imports, the banks have more funds available than usual, and, as shown above, actually bad an excess of deposits of half a million towards the end of the quarter, ft will be seen, therefore, that the banks are quite well off for funds, and during the next tew months will be accumulating further funds from the realisation of J-be sea-

son’s exports, so that an adequate supply of funds is assured for the nest six months. BANK HOLDINGS. Following are the shares of the different banks in these deposits and advances for the average of the December quarter:—

This shows that three banks —the Union, New South Wales, and Australasia —have advanced to borrowers more than they hold in deposits. The Bank of New Zealand and the National Banks are the only ones showing an increase in their deposits, while each bank shares in the decrease _in advances. Government deposits are £1,195,845, compared with £1,859,407 a year ago, and the banks hold £6,060,290 of Government and other funded securities, compared with £4,707,977 a year ago. NOTES AND GOLD. The only other items of general interest are the note circulation and metal holdings, which compare as follows December Quarter. Note Circulation. Coin and Bullion.

The circulation is lighter, partly due to hard times and partly to the general lower price level. The metal holdings keep steady since 1928, _ when a large export of specie not required here was made. A general survey of these figures shows that the banks are standing in a very good position. They have ample funds available to meet any legitimate requirements, and during the next few months will have their funds further augmented by realisations coming in from produce exported, so that an ample supply of funds is assured for the next few months. To show an excess of deposits of £543,766 in December, compared with an excess of _ advances of £3,581,055 a year ago, is a splendid recovery, and shows that the general financial position is improving, even though it is brought about mainly by curtailment of imports.

Free deposits December. £16,14-5,438 September. £16,590,661 Fixed deposits 34,635,595 34,180,556 Government deposits 1,195,845 2,694,786 Note circulation ... 5,926,902 5,584,542 Coin and bullion ... 6,872,638 6,942,332 Discounts 699,093 709,553 Advances 50,317,689 50,224,004 5,178,880 Gov. securities 6,050,290

—Deposits.— December Quarter. Free. Fixed. Total. 1931 ...£16,145,438 £34,635,595 £50,781,003 1930 ... 18,597,839 • 32,775,557 51,373,396 1929 ... 22,728,494 30,628,239 53,356,733 1928 ... 22,179,748 29,481,658 51,661,406 1927 ... 21,438,335 24,262,722 45,701,057

December Quarter. Advances. Discounts. Totals. 1931 £50,317,689 £699,093 £51,016,782 1930 52,214,674 1,168,074 54,382,748 1929 52,612,487 1,195,344 53,807,831 1928 46,810,684 1,290,420 48,101,104 1927 48,087,788 1,671,876 49,759,664

Quarter. Deposits. Advances. Advance. 1931 £50,781,033 £51,016,782 £235,749 1930 51,375,396 54,382,748 3,009,352 1929 53,356,753 53,807,831 451,098 1928 51,661,406 48,101,104 3,560,302* 1927 45,701,057 49,759,664 4,058,607 1926 44,236,649 51,273,221 7,036,562 of deposits.

Bank. Deposits. Advances. New Zealand ... £29,721,370 £23,812,792 Union ... 5,596,236 6,045,492 N.S. Wales ... ... 5,702,033 6,185,131 Australasia ... 4,475,576 5,051,793 National ... 8,823,713 8,475,573 Commercial ... 1,462,105 1,446,001

1931 . £5,926,902 £6,872,638 1930 . 6,133,388 6,862,939 1929 ' 6,544,523 6,614,963 1928 . , 6,521,106 7,262,331 1927 „ < 6,570,062 7,866,375