BANK OF NEW ZEALAND.

New Zealand Herald, Volume XXVIII, Issue 8669, 11 September 1891, Page 6

BANK OF NEW ZEALAND.

MEETING OF SHAREHOLDERS. [from our own correspondent.]

London, August 8. The ordinary general meeting of this Bank was held on Wednesday, the sth instant, at the Cannon-street Hotel, Mr, Richard 11. Glyn (the President) being in the chair. The Chairman said : Gentlemen, this is the first balance-sheet which the new Board have had the pleasure of submitting to you, and as it shows some large alterations in the figures compared with the balance-sheet that was issued up to the 31st March, ISOO, it will be convenient perhaps if I go briefly through it, and give you a few explanations as to how these alterations have occurred. In the first place, the capital'of tho Bank is now £900,000, as against £1,125,000 formerly, and I think you are all very well aware how this is arrived at. No doubt most of you were present at the meetings in August, when the proper resolutions were passed. It was by writing off £300,000, and by calling up £3 a share upon 25,000 shares of £10 each, upon which only £7 was paid. You will notice that there is still a small portion of this call unpaid, amounting to £2167. This is in process of collection, and no doubt will entirely disappear from the next balance i sheet. Wo duly applied to the Legislature of New Zealand for statutory confirmation of the resolutions reducing the capital, and I am glad to tell you that we have recently received a telegram stating that the Bill for that purpose has passed the Lower House, and onlv awaits the third reading in the Upper House, so that I make no doubt it will in (i short time become law. The reserve liability of the shareholders remains as it always was, at £1,500,000. Take the next item in the balance-sheet—notes in circulation, £453,000. That shows an increase of £30,000—not a very great matter in itself, but still it is satisfactory as showing that the notes of the Bank still command the confidence of the New Zealand public. The next item to which I must draw your atteution_is deposits and other liabilities. £7,436,776. This compares with £8,090,000 in the last balance-sheet, showing a loss of over £690,000, and I think it shows us what a severe straiu was placed upon this Bank during part of last year. It is curious to note that the strain was almost eutirelv in this country, and not in the colony where the Bunk, of course, is so very well known. Turning to the other side you will see that the coin, cash balances with bankers, and money at call and short notice amounts to £1,503,493. That is a little over 16 per cent, of our immediate liabilities to the public, so that we are in a strong financial position. The bills receivable call for no particular remark. In the Inst balancesheet there was one item of £8,092,000, under the heading of advances and other debts due to the Bank. That, of course, included the globo assets, which, at that time, had not been transferred. They have since been transferred, and now we have the Bank of New Zealand Estates Company's shares, and the amount has been divided into three items to make the balance-sheet as intelligible as possible. The difference between this and the 000,000 which I have referred to is accounted for roughly by the amount of cash received from the Estates Company for the sale of their debentures and the writing off of bad debts, with which you are all familiar. The landed property and Bank premises stand at £374,163; this is very nearly what it was the last time, and you will probably know that these premises are stated here at £150,000 less than they are valued at. I now come to the balance of profit and loss with which we have to deal to-day, £59.522, and here I may say that proper provision has been made for rebate on bills discounted, amounting to little over £8000; but of this £09,500 the directors, as you have been informed, have taken £20,000, and invested it in consols, to form the nucleus of a reserve fund, and on the prudence of that action, I take it, there can be no two opinions. As regards the balance of £30,522, 1 am aware that the shareholders are not entirely unanimous. Some shareholders have expressed the opinion that at this early stage it is very important to make the Bank as strong as possible, and that it would have been more prudent to have carried the whole amount of £39,500 forward, and not paid any dividend at the present time. That, no doubt, would be a very conservative course. The views of the shareholders have been vcrv carefully considered by the Board, but we had to take into consideration the fact that it is a long time since the shareholders of this Bank received any dividend, and its there amongst us a good many to whom some return upon their capital is of considerable importance, aud especially in these evil days, anil looking at the fact that there seems every hope that we may now be able to commence paying regular dividends, although, perhaps, of a. moderate amount, we feel ourselves justified in recommending you to make the small distribution which is mentioned in the report, and that, I hope, will meet with the approval of the shareholders. If you approve of that distribution it will leave" us £18,272 to carry forward. Now, can quite imagine that some, people may think that that is a large proportion of the net earnings for the Bank tor the past year, and perhaps it is, but I do not think it is quite our province at the present moment to make tilings very pleasant all round, but rather to make the Bank as strong as we possibly can, to increase the confidence of the public and of the depositors, and to regain some of the credit which was, unfortunately, lost in years gone by. There are many reasons why we should carry forward a large sum of money. It is very handy to have a fund that may be utilised for equalising dividends. You must remember tl#it the earning- power of this Bank at the present moment is very moderate, and consequently when losses occur —and you cannot run a bank without some current losses— they fall more heavily proportionately upon a bank which is making small profits than they do on an institution which is making large profits. Then, again, we do not quite know what the ultimate result will be of the financial proposals of . the New Zealand Government, and we cannot tell what effect they may have upon the business of the Bank, or upon the business of the Estates Company. That remains to be fieen, and I think in carrying forward this amount we are only acting in a prudent manner, because we want to restore the credit of the Bank, and make it as strong as we possibly can. As regards the Estates Company, we have every reason to believe that this is a satisfactory asset. The sales of the property, as far as they have gone, have come out well, above the valuations made by the late Mr. Hean, and they have consisted almost entirely—l may say entirely—of properties which return the very smallest revenue. The return was something under 2 per cent., and we have not yet begun to touch the properties which are returning - us a reasonable rate of interest. The revenue of the Estates Company for the past year was not quite up to our expectations, but this you can easily understand was owing to the very bad season through which the country passed. The prospects for the present year are, we are advised, excellent. Therefore, on. the whole, I think it is fair to say that we believe that the shares which we hold in this company are steadily enhancing in value, for we are advised that quite a demand has sprung up for station property, and generally the tone of things is very much better in the colonies; and I think the asset may be looked upon as worth a great deal more in the future than it is worth to-day. It may interest you to hear that Mr. JcU'ray, the chairman of the Estates Company, and a gentleman with considerable colonial experience, is at present in Australia on business of his own. and will take the opportunity of visiting New Zealand and conferring with the manager and officials of the Estates Company there, and I think we may expect considerable advantage to the company from his presence there. Now, gentlemen, I hope that our first balance-sheet will be considered by you as, at any rate, fairly satisfactory. Of course, it is not startlingly good, but you can hardly expect anything very remarkable at this very early stage. It certainly shows some progress in the right direction. I may tell you that the advances of the Bank at the end of April—which, as you know, is a month later than the date of this report —were about £400,000 more-than at the time when tho head office of the Bank was transferred from Auckland to London. This is perhaps not a very large increase, but money has been exceptionally cheap in the colony, owing, it is said, to the check given to enterprise by labour troubles, and again, I do not think it is our policy to force business or to expend too rapidly. The one thing it is important to do is to avoid losses, and our managers have to be very careful only to take very exceptionally good business, and consequently, no doubt, a certain amount of good business goes past us. i may tell you that recently—within the last day or two—we have had a telegram from the colony stating that there is a better demand for money, and that they have been able to place out £200,000 more, so that practically our advances at the present time are £600,000 in excess of what they were when the head was removed. One satisfactory feature—a very satisfactory feature—about _ this new business that we, have got is that it lias very largely come from old customers who have come back to clients who in the days when the Bank was exceedingly impecunious were unable to get from us such reasonable facilities as they were entitled to. They have not only come themselves, but «have introduced their friends as depositors and customers; and this is most gratifying evidence of returning confidence in the Bank in | tin: colony. Business in the colony does not appear to be very brisk, although I do not j know that New Zealand is any exception in

that respect at the present time. The outlook is certainly Rood, our prospects are encouraging, and our position is improving steadily. The losses which the colony suffered from bad harvests have been more than made? up by returns from wool and frozen mutton, and it is anticipated that there will be an exceptionally large increase this year from both of those sources. Then the laud settlement has apparently come 011 very favourably. I am told that the individual holdings in New Zealand amount to about £38.000, and this in proportion to the population is larger than any other Australian colony can boast of. Then again, bankruptcies are fewer and smaller, and money comes in better. The sayings of the people have increased. I believe the deposits in savings and other banks on March 31st were something like £750,000 in excess of what they were in March of the previous year. I do not know whether this means we shall have to take lower rates for money, but if it does it will cut both ways, because we shall have more solvent customers to deal with, and shall run less risk of making bad debts. The general manager was very well received in the colony, and he tells us that he found on every side most friendly feelings towards the Bank, and a general desire that it might recover its old position. Ho has been making a very extended tour, making the acquaintance of the managers and the customers, and he tells us he has gained very considerable experience thereby. We have had from him most copious reports from all centres, but, of course, one cannot go into these today. The gist ot them is that he is fairly well satisfied with the business of the Bank as far as he has seen it; he expresses a wish that there was rather more of it, but that, 1 hope, will come. He says that in old days we lost a good many valuable accounts, but that we still have a splendid connection—one capable of being extended largely on sound lines—and he sees no reason to doubt that if we can only get peace and quiet and can escape making any serious losses, we shall find that in a few years the Bank will be in as strons and safe position as its best friends could desire. I think, practically, the result of the last half-year, which has been an uneventful one, may be summed up by saying we have certainly gained an increase of business and an increase of credit. With these few remarks I have to move this formal resolution, viz. :—" That the report and balancesheet, as presented to the meeting, be received and adopted, and that a dividend be declared at the rate of 5 pet- cent per annum for the half-year ended 31st March, 1891." The Right Hon. Sir James Fkruusson'. Bart., M.P., seconded the resolution, which was put by the Chairman, and carried unanimously. The Chairman proposed the re-election of the retiring directors, Colonel Baring and Mr. J. A. Ewen, whom he described as very valuable members of the Board. Mr. E. H. Fison seconded the motion, which was agreed to. On the motion of Mr. Brewster, seconded by Mr. J. A. Ewes', Messrs. Edwin Waterhouse and GeorgeSneath (Price, Waterhouse, and Co.) were reappointed auditors. The Chairman* announced that the dividend warrants would be posted on Thursday night, and then declared the business of the meeting to be at an end. Mr. Collins proposed that a very hearty vote of thanks be accorded to the chairman and directors. The chairman had given the meeting a very concise and dear statement as to the Bank—so satisfactory, in fact, as to lead the meeting to adopt the report unanimously. Dr. W. D. Smyth seconded the motion.

Sir Edward Stafford, in supporting the resolution, said he wished to personally thank the chairman for the speech _ which he had made, and for the report which he had presented. As one who hail been a shareholder in the Bank from its promotion, he knew he was only expressing the deep sympathy which the old shareholders had experienced towards the institution since the first, and their great gratification at the prospect of its being removed from difficulties which some time back overshadowed it, when he tendered his thanks as one of those old shareholders to those members of the board who had the pluck and confidence in this Bank at a time which they now hoped and believed had passed, lie especially alluded to Sir James Fergusson and Mr. Mundella, M.P. The motion having been carried, _ the Chairman", in reply, said he was exceedingly obliged for the vote. The directors would always do their best to strengthen the bank, and to try to get it back to the grand position which it held in former years. The proceedings then terminated. The meeting being of a satisfactory nature, and therefore not calling for any special comment, there have been few remarks upon it iti the financial papers. The Investors' Guardian, however," considers that tho fact of the directors being able to declare a dividend of ft per cent, fully proved the wisdom of the changes which were made in August last. It considers the directors have acted wisely in deducting from the profit of £59,522 the sum of £20,000 to form tho nucleus of a reserve fund, which will place the Bank oil a firmer foundation than it has ever yet been, anil give a sense of security to customers and shareholders alike. In the opinion of this journal, the shareholders who attended the meeting and those who have read the report of the proceedings, must feel that their affairs are in the hands of capable men who have a firm grasp of the business, and who during the past six months have, as the Chairman put it, " increased the business and increased the credit" of the Bank. It holds that there is good reason to believe that most of the difficulties have been surmounted, and that there are ample grounds for anticipating a prosperous future. The Times stock and share list, this morning, quotes the Bank's new shares at £8.