BANKING EXPANSION.

Hawke's Bay Tribune, Volume XI, Issue 238, 12 October 1921, Page 4

BANKING EXPANSION.

In dealing a day or two ago with the banking situation some incidental comparison was made between tho relative figures of deposits and advances as appearing in New Zealand and Australian returns. Sydney files received by last night’s mail enable some comparison. that may be of interest, to be made also with regard to the expansion of hanking business in these two directions since the outbreak of the war. 'Hie Australian data are taken from a compilation, appearing in the “Australasian Banking and Insurance Record,” and are based upon tho latest balance-sheets published by tho various banks operating in the Commonwealth, including the Commonwealth Bank itself. Those for New Zealand are taken from the Year-Book and the September quarterly returns that have just been issued. The contrast between tho advances and deposits over the seven years may best be shown in a table as follows:— AUSTRALIA. 1914 1921 £ £ Deposits .. 201,511,204 324,174,526 Advances . . 148,098,413 267,500,765 NEW ZEALAND.

Deposits .. 27,640,507 43,445,663 Advances .. 25,222,127 48,039,611 It will be seen from the foregoing that, while in the Commonwealth the deposits increased by something like 58 per cent, and the advances by about 80 per cent., in Now Zealand tho deposits increased by about 57 per cent, and the advances by about 90 per cent. In 1914 tho ratio of advances to deposits was in Commonwealth about 72 per cent., and in New Zealand about 91 per cent. Ju 1921 this ratio had altered in tho Commonwealth to 82 per cent., and in the Dominion to 110 per cent. The Sydney writer who cites tho Commonwealth figures wo have given notes, in connection with the vo'.urne of business, that it must not be forgotten that the pound note in 1914 was the equivalent of a golden sovereign, but that to-day a live-pound note is scarcely the equivalent of four sovereigns. Having drawn attention to this fact, lie goes on to make some remarks on tho subject of bank dividends which may also ho of interest to us in view of tho dividends that have recently been declared by tho Bank of New Zealand. “In these circumstances,” ho writes, “it might be asked whether the dividends of Australian trading banks aro not due for an increase over tho steady rate which has hitherto been maintained generally. Where tho dividend has been, low that there should bo an increase, if profits provide, goes without saying, but where the dividend has been above 8 per cent., which is recognised as the standard in public utility companies, it is questionable whether an increase above what has been usual should be made. It is well to remember, in increasing any dividend beyond what has been tho practice of recent years, that if it is doin' by taking advantage of tho strength of the banking position to exact a little more interest on loans, it is unwise, because it antagonises borrowers, who include a great part of the commercial community, and a high rate of dividend would antagonise still more those interests which are calling tor the nationalisation of tho banking system of the Commonwealth.”