THE NATIONAL BANK OF NEW ZEALAND, Ltd.

Nelson Evening Mail, Volume XLIII, Issue XLIII, 17 September 1909, Page 4

THE NATIONAL BANK OF NEW ZEALAND, Ltd.

REPORT. The directors submit to tho shareholders their annual report with ' statements of the bank's affairs as on the 31st March last. ■ Tha net profit, after providing -for bad and doubtful debts, including £11,362 15s lOd brought forward from the- previous year, amounts to £104,785 17s 6d. ' The interim dividend at the rate of 10 per cent per annum, paid in Janiriry last, absorbed £18,750. The sum of £10,000 has been plowed to premises account, arid £5000 rppropri-o-ted to pay a bonus on the salaries of the staff, leaving now available for distribution £71,036 I7s 6d, which the directors propose to allocate as follows :— In payment oi a dividend for the half-year ended 31st March last at the rate of 10 per cent per annum 18,750 0 0 In payment of a Bonus of 3 per cent 11,250 0 0 To reserve- fund whioh will then stand at £375,000 25,000 0 0 To officers' pension fond 3,000 0 0 Balance to be- carried for- ■ ward 13,035 17 6 £71,035 17 6 The directors regret to have to report the death of their esteemed colleague, Mr Colin George Ross. The vacancy ifl the Board has been: filled .by the appointment of the Hon. William Pember Reeves, late High Commissioner for N^sy- Zealand, and bos name will be submitted, to tie meeting for re-election as ft djrectep. " . As provided) by the articles of association, two directors retire on the present occasion, Mr. Thomas Seaber and Mr Lindsay Eric Smith, who, being eligible, offer themselves for re-election. The auditors, Messrs Welton, Jones and Co., retire, but offer themselves for re-election. BALANCE SHEET, March 31, 1909. ; Dr. £ b. d. To Authorised Capital in 230,000 shares at £7 10s each. 1,725,000 0 0 T» eapital Issued— . 150,000 shares af. £7 10s each, £2 ftte paid 375,000 0 0 Reserve Fund 350,000 0 0 Notes in Circulation 247,177 0 0 Liabilities on Deposit and- Current Aci counts 3,853,871 5 9 Bills Payable and other* Liabilities (including the provision for bad and doubtful debt*) 536,005 15 10 Profit and Loss Acr count - 71,035 17 6 £5,433,089 19 1 Cr. £ s. d. By Coin and Bullion at Head Office and Blanches 1,104,592 10 2 Gash at Packets and money "at call at Short notice 225,643 17 0 Investments in Home and Fereign Securities ' 689,666 1? 6 Bills discounted 683,123 W 1 Bills Receivable in London and Remittances in transit 537,118 16 5 Advances on Securit/ies and Current Accounts 2,516,692 9 5 Landed Property, Premises, and Furniture 73,231 30 6 Sfti&effl 1? 1 Profit and Loss Acccbnt. Bji £. ?. d. Jo Interim Dividend f.gr * ' ' the half~year ended a&tb/Sepfc, 1908, - at the TaCe ci 10 per cent. ' per annum, £18,750; Premises (Account, £10,000 ; ! Bonua to Staff, £5000 33,750 0 0 Pyopijßßd," Allocation o| : Bh'anp^r ' ' | Dividend for tfee hajf.yttir ended jl&t March, 1909, at the rate of 10 per cent. ' ; per annum, £18,---7&0; Bonus of 3 jj.c, £11,250; Reserve Fund, '■ £25,000 ; Officers' Pension Fund, £3,000; To be onrr ried forward, £13,. 035 17s 6d 71,035 17 6 ! Total £104,785 17 6 Cr. £ s. d. By Balance at Ist April, \ 1908 11,362 16 10 ! Gross Profits for the 1 Year after making ! ! provision for bad and doubtful debts, ( £182,904- '2s sd; £«*- '-Expenses -of j Management, piree r i tors' "Remuneration. and Charges at j Head Office and 53 I 1 Branches and Agencies, £89,481 0s 9d 03,423 1 8 s . £104,785 17 6 H. FRESHWATER, ' Sec. and London Manager. Robert Logan, Chairman. ' Thomas Seaber, Director, REPORT of the Auditors to the Shareholders of The NationalBank of New Zealand, Limited. \Je have frjictfted, the above baJance : sheetl " and tiave jpiamiiie^ the books of the Company in London, and gbtained a)l (ho Information arid explanations we have required we have to report that in our opinion such ba-lance-sheet is properly drawn up so as ! to exhibit a true and. oorreot view of the state of the Company's affairs, according to the best of our information and the explanations given to us, and as shown by the books of the Company in kowJpn. and the certified statements re^ ceived from New Zealand. Wblton, Jones & Co., Auditors. London, 22nd June, 1909. The 37th ordinary general meeting of the shareholders was held at 17, Moor-gate-street, London, on 6th July, 1909, Robert Logan, Esq., (the chairman), presiding."" ; The Chairman : Gentlemen, with your permission we will, as usual, take the report as read. I prepared you when we last met for something it: the nature of a set-back in the prosperity of New Zeajand, -and my warning -has been to a great extent justified. The dominant note; of the year has been stringency of money- a stringency mainly due to the continued reduction in value of th« s*D9lfc surplus of the Dominion. How remarkable 'this reduction ntw been' will be seen- from- the/ fact that for the last ' ' four •" years ending on 31st March the surplus exports have amounted in 1905-6 to £3,579,000, in 1906-7 to £4,718,000, in 1907-8 to £398,000 only, and last year to £454,000. These figures show that . instead" of having a ' comfortable rtitfrgih' to provide interest on Iftans and the; ]i][e, the JJoininipJ! exports have doije Jityle nipw tjjjm SjVovifibf for the coßfc of goods impof ted. It is in this that, according to our view, Hep a good (l«al gf tb& explanation of the soma, what sharp' pinch fer money which has existed .in the Dominion during the year, and which still eylsts, and it i.s satisfaatery tlierefere, to we from tho latest figures Uiat imports are being restricted. ' This restriction cannot fail, before long, to have a beneficial effect on business conditions in theDomlnion generally. _ TKero has, in addition, been a considerable speculation in land notably in suburban areas— and it is, I think, probable that the standard of living has been gome up somewhat . too rapidly in the last few years. The net yssujt }s that, £ut for the revival in the

price of wool, the high values for dairy produce and the excellent agricultural outlook ,'the condition of kffairs in ftew Zealand might have given cause for considerable anxiety. As it is, '.whilb it cannot be said that the prospect is quite clear, there has been steady improvement in the financial outlook, and .with caution — to the necessity for which the people of the dominion are fully alive— w« look for an early return of the prosperity which New Zealand has enjoyed for. many years past. In connection with this matter, tliere has been a certain amount of discussion regarding the policy of the banks doing business in New Zealand, and the opinion has been^ advanced that they have been over cautious in restricting advances, and {hat banking facilities are insufficient. It is now, I think, admitted that the advances made by the banks have been as large as could reasonably be expected, having regard to the resources, but it 1 has also been argued 1 that an increase of capital would enable the banks to lend more freely. I will touch on the matter of an increase of capital as spe-\ eially affecting this bank later on, bat on the general question I would like to say that, for the most part, what a bank lends is the money it receives on loan from its customers, and that its share capita] forms, as a Tule, a very small portion indeed- of its loanable resources. Thus the loans made by a bank may increase when its deposits increase ; but; it would \9 the reverse of prudence to j jncrease loans w.hen deposits were <Je- ! creasing. Banking! deposits, owing to causes already mentioned, have'shp^-na i tendency to decrease— in spite of higher : rales of interest— and there is always i strong competition for deposits from ■ ■ various quarters.; Take the Govern- • i ment Sayings. Bank;, for example, with ' the security of the po'vernment; and the ' many facilities: itToffers, which in most instances the bank could not offer : . The amount 4t..<!rfedit of' depositors on ' io^c^S 1 ' 011 ' was £12,159,000, or £2,175,000 more .than the fixed (interest Bearing) deposits in all the five trading i banks. The many land' companies trad- • ing in New Zealand also receive deposits at rates',- in some instances, higher than the bank can afford, because while doing tliis banking business they do not maintain the Targe reserves in cash which sound banking demands. I i .would add that there is one more reason ior. the restriction of advances which \ has been animadverted on. It is that baijks- should, and I am glad to say have usually, in such a year as the , past, impressed caution on 'their ciisi tomers, and while meeting' the' demand for all legitimate' trade requirements have discouraged fresh advances and new enterprises. There is a considerable field in New Zealand for most forms of enterprise' known ib the people. (ji fch.is country; and the resources of tS'e Dominion have as yet Been only very partially exploited, But that is all the more reason why any, form &r extvavaganco Bhould be avoid- > cd. I will now ask you to turn to our ■ balance-sheet., It might have been expected that in consequence of the disturbance in financial matters already referred to the bank's profits would have ( been adversely affected, whereas there ' has been an improvement. Th.c prepei'tt Lfjanqe-Bhept ig tlis mpst satisfactory Statement %e!havi- p'v^r Been "'able 'to . jay before ' you. (Applause). But ithas !to be remembered ' that, whije following q, qautjeua . policy, we jiaye rtq^ contracted fliir. a'dvaijafis to any material extent, that rates for advances in the Dominion have been higher for some time past, that our interest charges are much less than they were last year, ! that the cost of remittances from New . Zealand lias decreased, and that we ' have had larger resources owing to the j increase of our reserve funds. These ■ ; factors are sufficient to account for our , increased profita, and all that need be said, further js tjjat, h S d cond^n*. }n ( the J^ominiojj been' uniformly prosper- ! bus, "We might have made a larger pro- j fit than we are now able to show. You' will observe that we propose \o increase ,tt}e reserve. fund to £37|>$9< P* " ftn amount equal to our paSiFfip capital. When we closed the year we had. investments — absolutely unencumbered—equalling about £28Q;00Q, and we have added .to that^pmount since then. Our coin and cash" have - increased by about £150,000, so that we are fully prepared for a revival of business, and the only other item to which I heed direct your , I attention, is that of our landed property, J I aio,wk) — is a very conservative estimate, but we may have to face heavy , expenditure at Auckland, and possibly ■ nt Duncdjh, and it is therefore prudent .to iwp the figures as low as possible, j In connection with our baftneersheet, I .may mention. that we began our reserve ' fund in "1896 — 13 years ago — with a mo- j dest £20,000; since then it has grown , Steadily until it now equals our in- > tspeased capital.. 6ur note eiroulation, Bur current' and fijfed deposits and our advances and discounts have nearly trebled in amount since then — a- very ' good record. (Hear, hear.) Ido not j think that 1. -.need detain you further; with the balance-sheet and profit and loss acoount^and I will therefore proceed to touch- briefly on the question ol the future policy of the Board in Tegard to' increasing the bank's capital. Them is no question which has been mor<s ' fully and carefully discussed by (ho j HW\> a ?3'J C R U W frufiish yoli' witji j jnany and' cogent arguments to allow | {hat an immediate increase of capital ' is desirable, and, on the other hand, ' with as many and as cogent arguments why an increase should be deferred- I say deferred, ueeause there is no doubt it must come in time. It may possibly ' come very sooh-rposibly not. *We will not, however, hesitate to apply to you for more capital when we can see our way to employ the money without run- ' ning undue risks, and with a reasonable; certainty of giving you as good a return on your money as you are at present reoeiving. ... I will. ask. pou, therefore, to leave this matter in the "hands of the B,oar<j, and you may rest assured that if jjjiy issug of BhaMff js made your iii^erests will be fully safeguarded. I will now move : "fhat the report and acpojints be adopted' and entered on the minutes." (Applause), ! The. rnotioh:was suported by Messrs A. M, Meyers- (Auckland), and G. M. Kebbell (Wellington), and carried unanimously. The usual formal resolutions were then passed, and the meeting terminate *• *__ !