BANK OF N.Z. PROFITS OVER £400,000 LAST YEAR

Grey River Argus, 28 October 1948, Page 10

BANK OF N.Z. PROFITS OVER £400,000 LAST YEAR

The annual report of the directors of. the Bank of .New Zealand to Pailiamcnt discloses a profit or <jo 19s 9d,. after allowing for management expenses, bad and doubtful dents and the annual donation to the I rovidem Fund. The directors in their report, St The gross profit shows a satisfactory increase, which is accounted lor by a higher leveL of advances, increased emnim-s from exchange transactions, fhe continffing increase in the number or customers' accounts ano. th- in creased volume of turnover or the bank's business generally, investment income shows a m repayment on maturity, or kja/mumem and Local. Body loans. Main fluctuation in expenses are.—Salaries and allowances .. up General expenses up 63,134 Rates and taxes up 7,171 Total 141,446 An increase in expenses is to be expected with the higher all round costs prevailing under present, day conditions, but in addition there is,the extra expense involved, in handling a larger volume of business. In view of the advances being at. a high level, as referred, to later in the report, and having regard to the uncertainties ahead and the disturbed state of world affairs, it has been considered prudent-to strengthen our internal reserves. " BALANCE SHEET Deposits—fixed and free —£80,681,281. These show an increase for the year of £lO 868,616, almost wholly accounted for by an increase in fr.ee deposits, the increase in fixed deposits being £918,2'66 only. The following graphs of deposits and advances in New Zealand have been .prepared to show our experience dialing and immediately after the two ’Great Wars. Graph A shows the trend of deposits and advances from tn.; beginning of World War I and 10 years thereafter. It. will be seen a peak was reached two years after World War I and a pronounced fall followed. , , Coin reserve, bank notes and deposits with bankers —£24,810,947— show a decrease for the year of £1,546,182. Our cash holdings in Australia . reduced. during the year due mainly to an increase in advances to customers. Our balance with the Reserve Bank of New Zealand at £17,577,882. shows a decrease of £289,211. and our holding of Reserve Bank notes at £4,626,138 is down £33,670. Our statutory deposit with the Reserve Eank of New Zealand amounted to £4,288,748, leaving us with surplus cash in this account at balance date of £13,289,074, compared with a surplus last year of £13,997.100. No interest is allowed .on. the batance with ths Reserve i2>cini<. mis represents idle money, which, of course, yields no return, but it serves 'to emphasise the bank’s substantial liquid funds. Money at call and . short notice, Govt, and other securities in London, | £9,013,020. —This shows an increase of £1.500,000, accounted for by an ini crease in our call money,, but . there is no special significance in this. The monies at call and short notice service the bank's day . to day operations. There are substantial commitments and liabilities against these funds and they are, of course, subject to rapid fluctuations. The Reserve Bank of New Zealand holds the bulk of the Dominion’s overseas funds under the exchange control system that Jias been in force for some years. , The bank’s reserve, fund of £n,am,OC'J, included in the figures under this heading, is invested ■in British Government Securities. There has been no change during the year m our investments in London. . .

New Zealand Government securities £10.589,2’34. —These show a reduction of £943,3-9, accounted for by the redemption of stock which fell due during the year. The Government policy of not permitting the trading banks to Subscribe for or take up Government loans is having its effect. Over the last four years the reduction in such securities in the case of this bank alone, is £6,831,460. CREDIT CONTROL The Reserve Bank’s control of advances has been continued during the year, in accordance with public announcements of policy. It is designed to avoi'd the use of bank credit for purposes which would more suitably be financed by loans or capital from other sources. The operation of the policy has not hampered ordinary trading business, but it has been much misunderstood by the general public. That it has not prevented an increase in advances is obvious, but, without it, the advances may well have been higher. Such a policy must be reasonably flexible if it is not to force hardship on certain people, and the Reserve Bank has administered the policy with every consideration. REHABILITATION EUS I N ESS In order to assist in the work of rehabilitation of ex-service personnel an arrangement has been come to with the Rehabilitation Department for the bank’s services .to be used, in certain cases in an advisory capacity. It was felt that our managers would be able to afford valuable, assistance in this very impoTtaht work of rehabilitation, and it was arranged that where de's’rcd they should ‘be co-opted to Tire District Rehabilitation mi'ttees. The idea has proved itself and our managers have cheerfully undertaken this additional duty. DROUGHT AND FLOOD RELIEF The drought relief advances whicn were made two years ago by arrangement with the Government and under Government guarantee, have been systematically reduced and the small remaining balance should be liquidated successfully. The flooding m the Wairarapa last year was dealt with in a similar way, but, fortunately., the actual flood losses were relatively minor and there was little necessity for relief loans. The bank co-operated fully with the Government’s officers in dealing with the cases.