THE H.B. TRIBUNE SATURDAY, JULY 9, 1932 BANKING FIGURES.

Hawke's Bay Tribune, Volume XXII, Issue 175, 9 July 1932, Page 6

THE H.B. TRIBUNE SATURDAY, JULY 9, 1932 BANKING FIGURES.

Even in prosperous times the periodical returns published by our trading banks are of interest to those who are concerned with the trend of financial and commercial operations. In times like those through which we are now passing they are of still wider interest as symptoms of how things are shaping towards recovery. Yesterday we had telegraphed to us some of the figures relating to the position for the quarter that ended with last month. These provided some comparisons as between that quarter and the corresponding period of last year. Perhaps of still greater interest are the tables now made available showing the marked changes that have taken place during the last seven years. Of these, as being the most comprehensive and indicative, we may embody here those which show the relations between “fixed” and “free” deposits—the latter being credit balances on current accounts—and those between the aggregate of fixed and free deposits, on the one hand, and of advances and discounts on the other.

Fixed Free June deposits, deposits. Total, quarter. £ £ £ 1927 21,749,104 24,741,262 46,490,366 1928 27,589,988 25,357,145 52,947,133 1929 30,241,013 26,810,881 57,051,894 1930 30,522,174 23,225,864 53,748,038 1931 33,045,224 18,124,162 51,169,386 1932 35,440,900 16,815,882 52,216,782 1926 20,674,853 27,594,496 48,268,349 The notable features about this table are the continuously progressive increase in the amount of the fixed deposits and a generally corresponding shrinkage in the free. It will be seen that, as compared with the position two years ago, fixed deposits have g< up by nearly £5 million and .deposits have come down by about tU million, the reduction in the.

aggregates being only £U million. On a percentage basis, the ratio cf fixed to free in 1930 was about 57 to 43, whereas it is now about 68 to 32. These are very significant figures, when we come to consider that the free deposits represent in large measure the liquid resources with which, apart from banking advances, the daily industrial and business activities of the country are carried on. The transition that has thus taken place indicates only too clearly the stagnation that has fallen upon us here, as in other parts of the world. This is, of course, largely the result of the paralysing effect of heavy taxation and of fears as to what is to come next. At the same time, it also provides strong testimony of the confidence which is placed in the stability and discretion of the banking institutions to which those with loose capital entrust their money—virtually for reinvestment to provide returns out of which interest has to be paid to the fixed-deposit holders. Taking the changing relations of the aggregate of fixed and free deposits as against the accommodation afforded by the banks to their customers, we find them set out in the following table: — June Deposits. Advances. Excess, quarter. £ £ £ 1925 51,463,635 43,935,770 7,527,865* 1926 48,269,349 48,714,742 445,3931 1927 46,490,366 50,753,106 4,262,740 t 1928 52,947,133 45,426,955 7,520,178* 1929 57,051,894 47,407,211 9,644,683* 1930 53,748,038 54,063,162 315,124 f 1931 51,169,387 53,395,534 2,226,147 f 1932 52,216,782 50,581,395 1,635,387* ‘Excess of deposits. tExcess of advances. Broadly speaking, though subject to qualification, the alternations in this table are suggestive of easy times with big excess deposits and relatively difficult times with the balance on the other side. Going back two years, we find a slight excess of advances taking the place of a big surplus of deposits in the previous year. Last year the excess of advances had mounted to nearly £2| million, showing the extent to which the banks had strained their resources to meet the exceptional calls made upon them. Since then, as bare prudence demanded, the advances have been substantially curtailed, leaving now an excess of over £l| million in favour of deposits. Though, of course, without knowledge of detail figures, this cannot be said with full assurance, it seems probable that this change in the position has been wrought chiefly as the result of the enforced contraction in our imports, easing the requirements of importers, and not so much by the withdrawal of credit to our home producers.