BANK OF NEW ZEALAND.

North Otago Times, 5 December 1908, Page 4

BANK OF NEW ZEALAND.

*T .... fer Press Association. Wnytou, December 4. Speaking at the half-yearly meeting of the Bunfc of New Zealand ■to-day, I lie Chairman - (Mr Beauclump) said the profits of the Bank /or the six wonliis ending September 30th wero nxceed.ugly satisfactory, and there was reason to anticipate that the current financial. yea* would compare favot. a'jly with, its predecessors. The combined advances and discounts ol the banlis transacting business in the Dominion aro the highest on record, be-

ing at the,,3oth September £21,217,951), us compared with £18,498,184 lor the same date of last year,, an increase of ■ Private deposits J decreased by £1,314,995, and Government deposits by £837,103. malting a total change of £4,951,963. These altera! relations between the banks and customers were brought about by the sudden unexpected fall-in the price of wool and other primary products, while the phonomenal prices ruling: enabled' producers to carry on operations without leaning unduly upon the 'blinks slid simultaneously prompted farmers to increase their holdings, and much ! land was purchased on the assumption lliat the fat ,yeai'3 would ".'onti'.nue in- . definitely. In the towns there was a similar effect. Urban and suburbau

land values encouraged many wholesale, mid retail firms'to trade beyond (heir mearo, also extmvaganw j" living. With the curtailing of credit and economy of prito expenditure 1 llic financial equilibrium will t'oon be t restored. With the strong demand for butter and cheese, exports of these !, should touch £2,500,000 before the. (•lose of the toaso)). There kas'also _ been - a marked improvement in tho values of wool in Europe. Australia , and New Zealand can scaro;ly look for the recovery of hemp, kauii gum, i. pelts, and frozen meat until trade revives, in Great Britain and America, A wonderful revival of industrial oci. tivity is anticipated in America, which will naturally have a material effect upon the Dominion, This time last year the Bank of England rate was 7 per cent, to<lay it is 2$ per cent, and | 0 money in London is a drug in th 6 market. Day by-day loans have been {_ available at \to J per cent, and 1 per cent has' been tho charge for the 3 week, whilst thfc working rate for three l' months bills has been 1 7-ltiths per ' cent. In spite of these unusual moiwB tary conditions, it is still hard to s ' float loans on account of public bodies, the reason being that the 0 British public are shy of such investr'. meuls, and as there is a largo amount of undigested issues in the hands of ~, underwriting syndicates and stockf" brokers, until ihcse are absorbed (ho public bodies of tho Dominion cannot f expect to receive much encouragement in London, The time is not far disl([ tant when it will be dcsirablo to colics pider the question of increasing the capital ot tho Bank, and thus biing \j it more int p lino with the other banks represented in tho Dominion. To fill _ tho position of. the retiring directors, therci were t«vo candidates—Mr William Watson, a monitor of the Board siuco ,j. 1894, and llr Herbert I'. BaWson, A ballot of shareholders resulted in Mr s _ Watscn scoring 35,331 and Mr Unwson ij' •1074 votes. Out of the profits of the j,', rast half financial year tho Board declared an interim dividend of o per a fnit on both preference u ii(l oidmury 2 shares. The dividend will bo pavablo ' in Wellington on Monday next, awl brandies arc in receipt of advice.

, Mr Watson returned thanks for his election as director. On iho question of increasing the dividends, he many of the shareiioldors lia.i written to him, li lie saw lUtit the Bank was al)lc to pay inorcased eliviebnds as well as to substantially add t () the reserve fund, he would advocate it on the Board. Few of the general public understood the position of orauuiry shareholders in the Bank- of New Zealand.

, Mr Martin Kennedy said ilmt hitherto iie had not asked for increased dividends, though li'j had advocated it in the near future. Ho declared that an increase of dividends would be asked for. Strictly speaking, tin; Bank, on ut capital basis c/f a million and a half, was only paying 3 per wilt at present. Mr T. S. Watson hoped the shareholders would bo advised of any intention to increase the capital. Tlicy did not want a repetition of what took placo in I'JO3. The Chairman, in reply, dealt with the relative positions of the Governmailt and shareholders. Mr Kennedy had put tlio relationship in a light that was 'scarcely fair. Although the Government held only i' 500,000 worth of preferential shares, they also held a guarantee of £1,000,000,-and were therefore interested to tlio extent oi £1,500,000, and -it was impossible to get away from the question of repayment in 1914. Until tlio guarantee w n s extinguished the Government had a right to be represented oil tlu Board to the amount of the guarantee plus Ihci amount of share capital which they held.

The meeting concluded with votes of thanks to tlio Chairman and staff. At a meeting of shareholders of tho Bank of New Zealand Mr Watson said j shareholders had communicated with | him. regarding the sinallness of the dividends. Some have pressed for a portion of tho lost capital being placed out of tlio profits. Others suggested calls or the fresh issue of capital at par, and a few with an augmentation of the rescrvo fund. If able to pay increased ■dividends, as well as add substantially to' the rescrvo fund at the end of ' the present financial year, lie would advocate.it.,. Mr Kennedy said on one or two occasions he had indicated that his own preference would be for an increase oi dividends, and ho did not think an increase should be long deferred, The capital was divided into preference and ordinary shares, ft was a peculiar anomaly .'that tho smaller inter'es'fcs, so far as capital was concerned, had control oi dividends, No one [would contest tho 'maintenance ot a strong reserve, but, at one time it whs . urgeil that if a. reserve of £IOO,OOO could bo set :aside it'would bo Satisfactory; but £200,000 was to bo sot. aside, and it was accordingly urged , that the "dividends should not bo in-, creasnl by 5 per cent/'. ; The facts he submi I ted indicated that there was soino control which did not appear on

oii the '.point ' would disßjt 'pear. > Ha. contexided, that fo t* tlio ■ purr pow of dividends the- share iSpital: had,to :be stated at a million ami. a half (iio't> ono - rhllHon, taking ' 6c-. count of the half-million wiped "out), und oti' that basis the dividends- paid : amounted.tojonly- 5 per ■ cent* , T«oE nically this could\ not' be.done or. shown in tlio balance-sheet, but it represented the ti'ue position, Jlo coiieluded by stating that ho hoped, ,r.p matter what might bo : thought by one or .two. members of Parliament, that tlio Board would bo independent. •; V Mr T. S. Weston referred to the possibility in the near future of the question of "increasing the capital .of the , Bault,' as shareholders would like to have an assurance that any schomo 1 brought forward would bo submitted

to shareholders. ' The Chairman, in reply, dealt _ with ] tho,' question ot tlio relative positions of tho Government aud shareholders. So far as he was concerned ho considered Mr Kennedy hod put-the rela* tionship in a light tliat was;'scarcely fair. Although the Government hold only £500,000 preference shares in the amount of paitf up capital, it also held a guarantee of £1,000,000 in tho direction o! the liability of the colony, and was therefore interested to tho oxtent of £1,500,000. It was impossible to get away from the question of repayment in 1914. Until the guarantee wan extinguished the Government had a right to be represented 011 tho Board to the amount of the

guarantee plus the amount of Bhare capital which it held, Mr Beauchamp complimented the representatives _of the shareholders on their pertinacity in putting the views of shareholders before the Board, and alluded to tho general unanimity between the shareholders and the nominees of the Government. He thought it was Bomewhat -premature at the present time to deal with the scliemo mentioned by Mr Weston. He would say that whenever any scheme considered by the directors should bo brought down with tho object of benefitting the Bank as n wholo it would be proper lo consult both the holders o( preference'shares and 'tlio holders of ordinary shares.