BANK OF NEW ZEALAND.

New Zealand Herald, Volume XLI, Issue 12609, 25 June 1904, Page 3

BANK OF NEW ZEALAND.

ANNUAL MEETING. [by telegraph.] Wellington, Friday. This ordinary general meeting of the proprietors of the Bank of New Zealand was held at the head office of the Bank to-day. Mr. F. de C. Malet, chairman of directors, presided. The report of the directors stated: — The director* submit herewith the balance-sheet and profit and loss statement of the Bank for the year ended March 31 last The profits, after providing for expenses of management, all bad and doubtful debts in the Bank's current business, annual donation to provident fund, bonus to staff, provision far depreciation of investment stock (£30,345), and expenses of renewal of guaranteed stock, are £393,803 3 10 From this has to be deducted— Interest on guaranteed stock , (£3,000,000) ... 80,000 0 0 Leaving balance of available profits.., £213,803 3 10 Of this sum the directors have allocated £12,500 3s lOd as follows:— In reduction of Colonial Bank property and premises, £2000 In reduction of Bank of New Zealand property, premises, and furniture, £10,500 3s lOd 12,500 3 10 Leaving balance in profit and loss of £200,303 0 0 This the directors propose should be disposed of as follows: — Statutory payment to Assets Realisation Board, £50,000 Dividend at the rate of 5 per cent. for the year ended Maroh 31, on the share capital with call paid up on that date (£425,613 6s 8d), £21,281. Leaving surplus payable to Assets Realisation Board in terms of the Bank of New Zealand Act, 1903, Clause 15, £129,022 (of which £3489 18s 4d has already been paid on account of income tax ou debentures) ... ... £200,303 0 0

During the year branches have been opened at Maryborough and Taiuape, in the North Island. The branch at Rakaia, in the South Island, has been reopened with an agency'' at Methven. The branch at Clyde is no longer open daily, but is visited once a week from Alexandra (Otago). F. de 0. Malbt, Chairman. In moving the adoption of the report and balance-sheet, the Chairman (Mr. Malet) said: I am pleased to be able to place again before shareholders so satisfactory a report and balance-sheet as that recently distributed among you. It seems almost unnecessary for me to point to any improvement in particular, for an examination of the balance-sheet will show that very satisfactory progress has been made throughout. • I propose on this occasion ,to refer only to the items in which there is a variation of a more than average character. Capital: Under this head an increase appears, due to further small payments by some of the shareholders who were in arrears, and to the issue of preference shares to an amount of £500,000 to the Government in terms of recent legislation. In notes in circulation there is an expansion by the Bum of £93,229. Bills payable are always a varying Quantity, which is largely affected by the amount of paper issued to the Government for transmission to London to meet the indebtedness of the colony. The increase of about £504000 at the present time has, therefore, little significance. Deposits are less by £165,000. At March, 1993, the Government moneys on hand stood at a higher figure than at the same date this year. Had the balance-sheet given Government deposits and deposits of the public separately, an increase in the latter class of something like £150,000 would have been shown. ,'-..',„ '

In coin, cash balances, and bullion aciount a position of strength is maintained, while money at short call. Government securities and other securities in London, exhibit an increase of £414,000. This sum is more than accounted for by the securities taken over from the. - Government in London' on the day of the balance in payment of the preference shares issued on that date. The aggregate of these items is very large, consequent on the necessity of making provision for the repayment in July next of £1,000,000 guaranteed stock. Assets Realisation Board Debentures: The entire issue of the Assets Realisation Board debentures at 31st March last aggregated £1,800,000. These debentures, as you ai"B aware, were renewed for a further period of five years; such as were in the hands of the public (£311,000) are being redeemed, and as soon as the balance of £71,700 has been paid the Bank will then hold the entire issue. Bills discounted and advances are over £500.000 higher than last year. Seeing flat the business undertaken has been of a thoroughly sound nature, and, as far as the directors are able to judge, perfectly safe, the extension must be considered satisfactory. - ■ - Assets in Liquidation: Such of three assets as were not transferred to the Assets Realisation Board, but which were left to the Bank to wind up 'when the Bank of New Zealand Estates Co. ceased operations, have been further reduced by £18.580 from realisations, apart from the operations of.the East Coast Native Trust Lands Board, who have effected sales representing a sum of, say, .+•.36.340, of which, say, £12,000 has been up to date received by the Bank. The " Assets in Liquidation" account originally stood (in 1897) at £580,000. and now after deducting the sales made by the East Coast Native Lands Board will be ifurther, reduced to, say, £156,800. "•■ ■\v >}-; ".':• lv'V '"_'

Colonial Bank Property and Premises: Two more of the business premises taken over by the Bank have been disposed of during the year, and a farther appropriation (£2000) has been made for any deficiency that may arise. The premises which were taken over at £125,371 now stand at £8120. The directors hope to see this account soon disappear from the books. ■ 4 . ■ _.: _ . Profit and Loss Account: As the result of an expansion of business the charges have increased. Moreover, our business premises throughout the colony, many of which are of wood, require considerable attention from time to time. In addition to the direct appropriations which have to be made year by year, it must be borne in mind that all repairs and renovation for the upkeep of the 131 branches and agencies are a charge to this account. A larger income involves heavier taxation, as, for instance, the rates and taxes have increased during the year from £8700 to £10.400, and, further, the additional rate chargeable under the revised graduated land tax forms no inconsiderable item. i Again, apart from the cost of stationery and labour in the issue of the banknotes, a sum of £15,000 has been paid this year to the State for stamp duty. » .• - After making provision for the customary items this year as last, vis., management, bad and doubtful debts, and donation to the provident fund, and £80,000. the interest on the guaranteed stock (£2,000,000), the balance of net profits for this • year amounted to £251,182 9s lOd, as compared with £210,590 128 Id on the 31st March, 1903. You will at once see that the Bank has experienced an exceptionally prosperous year, indeed, a might go further and say that the profits have been abnormal. At the . same time let, me add that the result shown is not owing to any increased charges to our customers, but rather to the fact that the business under every head has been well maintained. Exchange operations, through the peculiar condition of the money market In America and England, have been remunerative. Then, again, our strong position in London enabled us to take full advantage of the high rates ruling there for loans at short notice. '■ Before dealing with the special charges this year on this account, viz., (A) Bonus to staff; (B) provision for depreciation of investment stock; and (C) expenses of renewal of guaranteed stock, let me , first say that the Bank has been fortw (especially having regard to the large \ lume of business) in having to make a very small appropriation on account of bad and doubtful debts. The bonus to the staff I feel sure will meet with your hearty approval. I may reeail the remarks made at a meeting of shareholders, two years back, by one of your number, who expressed the opinion that the officials of the Bank deserved the special thanks of the shareholders for the manner in which they had stuck to the Bank in its dark days, and he hoped, as the opportunity occurred, their loyalty and good work would be substantially recognised. It must not be forgotten that some of the staff years back had also the unpleasant experience, extending over a few years, of a tea per cent, reduction on their salaries. The directors were, indeed. very pleased to see their way to recognise the good work of the staff and the valuable assistance rendered by them to the Board in the discharge of their duties. The recognition was in a sense overdue, but it was not until now that the circumstanoeos were favourable, and that the directors were able to return to the staff a small proportion of that profit which their efficient services have so materially contributed to during the period now under review.. . , ~ The provision made (£30.345) for depreciation of investment stock calls for reference. I will not weary vou with a disquisition on the well-known reasons which have led many similar institutions, both in these colonies and the Mother Country, to make a provision of this nature. We should have been wanting in our duty had we not done so. We have placed to one side an amount (£30.345) equal to the difference between book value and the lowest market price of such stock at the date of the balance-sheet. Prices have since shown a slight recovery, and in time gilt-edged securities now temporarily depressed through many causes will, no doubt, regain their former position, when thiß sum will be set free. ■ We have appropriated a sum estimated as sufficient to meet the expenses attendant upon the renewal of the guaranteed stock in July next. . , Notwithstanding the foregoing appropriations we are still in a position to make the statutory payment to the Assets Realisation Board of £50.000, to provide £21,281 for dividends, and to pay over a sum of £129.022 towards providing against shrinkage in the securities of the Assets Realisation Board, as against a payment of £124,410 last year, towards the same end. ..... Before leaving this subject it will interest vou to know that the Bank, after meeting all expenses, shall have up to date out of profits paid to the Assets Realisation Board, and ■appropriated towards wiping out deflciencks and paper assets in the balance-sheet of the Bank, a sun of no less than £1,181,805.' This amount includes the figures in the balancesheet now before us. I have much pleasure in again referring to the satisfactery increase in new business which affords the best indicai tion of the extended confidence in the Bank.

Election of Directors: It la now provided that the election of the two directors by shareholders shall bo carried out by voting gapers being sent to each individual snareholder, very much on the same lines as many of you are used to in connection with voting for directors of life insurance aad other companies. We propose, therefore, to distribute with the report of these proceedings a copy of the by-laws as drafted for the conduct of such elections, made in terms of clause 20 (2,1 of the Bank of New Zealand Act, 1903. Shareholders wishing to stand for election must give notice to the head office of the Bank not less than four calendar months before the month in which the election is to take place. As the election is held at the halfyearly -meeting in.December, it would be necessary for anv intending candidate to give notice before the end of July, when as soon as practicable thereafter, and not later than three weeks, the officer at head office required to conduct the election, shs.ll forward to each shareholder a voting paper to be returned to head office not later than five clear days before the month in which the election is to take place, i.e., not later than the 24th November next. The result of the election will then be announced at the December meeting. If shareholders receive no further notice they will understand that no election is necessary in the event of but one candidate ° Assets Bealisation Board: Tho Bank of New Zealand Act, 1903. requires that not later than the Ist January, 1904, and again between the months of October and December m 1908, and also at such other times as the Board of Directors of the Bank or the Colonial Treasurer thinks fit, the chief auditor shall causa tlia properties vested in this Board to be valued and the actual deficiency between such value and the amount of the outstanding debentures of that Board, with interest, to bo ascertained. ' ... The following are the figures as supplied by the general manager of the Assets Eealisation Board, showing the valuations as on Ist January. 1904:Stations— ' . '>-„,,«» Land £557,M8 - Sundry Properties ... 165,882 „_„,.-„ — £723,180 Stock, produce on hand and afloat (but not drawn j against), and sundry- I assets. 228-031 Mortgages alnd Balances - due by purchasers ... 353,434 Government,debentures ... 38,500 361,9:4 Bank Account 49,569 Less sundry liabilities ... 628 43,941 N.Z. Thames Valley Land Co. Our proportion of &.,■: • ■;:,; assets on share basis 251-428ths 53,635 Total £1.415,721 The debentures of the Assets Realisation Board outstanding on the Ist January, 1904, represented a sum of £1,920,(100; therefore, after deducting the figures (£1.415.721) given in the valuation as on the Ist January, 1904.. set eut above, there remainu the sum of £504,279 to be provided out of the profits of the Bank. I caused' application to be made to the general manager of the Assets Realisation Beard for the information given in the following table, which has been supplied by him, and that, I think, will be of interest to you: — , ~-■;. -■- REALISATIONS AS AT 31ST VIAKCH, 1304. 1. Properties fully realised, including stock ... £700,975 2. Properties partially realised ... 549,053

Total realised £1,250,053 3. Cash received on account ... 809,303 3.. Balances unpaid ... ... ... 440,7515 £1.253,008 5. Total amount received by the Board from the Bank to 315t.,.,, March, 1904 ... 617,917 6. Total value of debentures redeemed,... ... ? 880,285 6 9 7. Debentures outstanding at 31st March, 1904 ... 1,800,000 Yon will observe from the balance-sheet now before you that It is proposed to hand over to the Assets Realisation Board £179,022, being the statutory payment of £50,009 and £129.022. the balance or the net profits of the Bank, thereby increasing the figures £617,917, amount received by ■ the Assets Realisation Board from the Bank to 31st March last, to £796.939, and after payment of Inoome Ta,x (£3489), further reducing the deficit as shown by the valuation of the Assets Realisation Board from £504,279 to £328,746. The general manager, Mr. Macintosh, as you will notice, is not present here to-day. He is op leave of absence for a few months. His visit to London will enable hm to make the acquaintance sof the London Board' and staff. In his absence Mr. Michie, the manager of the branch at Dunedin, is discharging the duties of general manager. Audit Department: The Government have appointed Mr. : William Callender, chief auditor, in the place of Mr. Macintosh (now general manager), who held that office for some years. Mr. Callender was senior inspector of this Bank when he accepted the post which he now fills, and had been in the service of this institution for a period of over thirty years. '■■■■■;; • : - ..: : ' :,' ,■ Mr. Martin Kennedy, one 'of the directors elected by the shareholders, ill also on a visit to the Mother Country. During his stay in liondon he will be associated with the London Board. The knowledge of thu London business acquired by conference with the members of the London Board, and attendance at their meetings, cannot 1 be otherwise than of great use, not only to the director, but subsequently also to his colleagues and the officials at head office on his return to the colony. The Staff: I havs much pleasure in acknowledging the ready assistance and support my brother directors ' have always given ,to me in carrying on my work lis chairman of this Board. I desire also on* behalf of my fellow directors and myself to again refer to and thank the general manager and the staff for the services rendered jby them to the

Bank. Dividend: The remits shown in the Profit and Loss Account leave no room for doubt that the position fully warrants the payment of the maximum dividend authorised by legislation—five per centum per annum. If you see fit to adopt the recommendation of the directors a dividend at that rate for the twelve months ended the 31st March last will be payable at the head office on Monday next, and at the branches upon the receipt cf 21(1 vice ■ '■?"["" '"'': ■ ■■''*■'".-/.'*■ r >." "'""■ •"'■'':""' ! ' n ..• ■ "*" '. * ' -. * '*. I now move the adoption of the report and [The balance-sheet is published over the Leader in this issue.]•".;■ -,'»,..,; '.' ' Mr. Watson, in seconding the adoption of | the report and balance-sheet, said:— i;~>% ] It has become the time-honoured custom at >■ our annual' general meetings for the director \ appointed by the shareholders, who is tile, next to retire; to second the adoption of the report and balance-sheet, to place-before the shareholders his views regarding the position and prospects of the Bank and •: the Assets Board, and to state his intention as to stand-: ing for re-election. This year it is my turn, and I have the pleasant duty of seconding the adoption of a very, favourable report ~; and balance-sheet. , , m. The chairman has gone so fully into: the various items that there is nothing left for; me to say regarding the figures, beyond adding my testimony to that of the certifying J officers by assuring you that ample provision! has been made for doubtful ~, accounts, and that the business as represented is sound and. healthy. ':' ■ - In addressing you in August, 1902, I estimated the deficiency in the Assets Board then at £677,000, and I also estimated that it would be reduced by at least £100,000 annually. Of course, that estimate was on the safe side, and from what the chairman has just said you'; will see that the valuation of the assets makes the position to-day much batter than what two years ago I led you to expect i.t would be, Now, we must accept the estimate of the present deficit, viz., £328,000, as being the closest we can get, and I trust I shall not be regardedas being unduly sanguine when I say .that at the rate we are going ,it only takes an arithmetical calculation to give us the expectation that the deficit will disappear altogether in three or four years. " '- •" :i . ■ '' The next question which will present itself to shareholders is, will the profits of the Bank be more largely distributed .in the shape of , dividends after the deficit shall have been I wiped off? Speaking for myself alone, and I not for my colleagues on the Board, I am of opinion that there will be nothing to hinder, such distribution, if the Board of. that . day, having due regard to setting aside reasonable amount* to augment the reserve fund, see fit to recommend it. I would here congratulate you on the arrangements made in your in-' terests with the Government and embodied in the Act of 1903. Clause 15 of that Act enjoins that the surplus net profits oil the Bank shall be applied as they now are, but only so long; as the liability of the colony continues to sub-: sist in respect of debentures issued by the Assets Board. Clause 23 sayii that when by valuation it is found that the assets are sufficient to meet the outstanding liabilities of the Assets Board, the Governor may, by Order-in-Council, declare that the Assets Board shall cease to exist, and thereupon its assets and; liabilities shall pass to, vest in, and devolve upon the Bank, and the Bank shall thereupon redeem all the outstanding debentures, and deliver them to the Colonial Treasurer tor, cancellation. This, I think, is quite conclusive. The modus operandi will naturally be that the remainder of the assets will appear in the Bank's balance-sheet under the heading " Assets in Liquidation." The amount of that account will be carefully kept within the value of the assets representing it, and any provision which from time to time may possibly have to be made for losses on realisation will not be likely to seriously affect the Ban profit and loss account. £ '■ V • So much for the near future. Comparing the deficiency as it exists at present with the value of the goodwill of the Bank of New; Zealand. I can only say that I congratulate you most heartily on the position ae it is. I have now to announce that I shall again be a candidate for re-election as a director in December next, and trust to receive another 1 extension of your confidence. I formally second the adoption of the report and balance-sheet. • , - A short discussion took place on the motion for adoption of the report and balance-sheet. Mr. Beauchamn said the exhaustive speech of the chairman fully reflected the views of the Board as a whole. He paid a. high tribute to the ability of the London Board in discharging their onerous duties. He mentioned that the Bank shipped from the colony last year 45,000 bales of wool, in addition to a large* quantity of other produce. Mr. M. Kebhell said he supposed the Bank could not help underwriting the Government loans. ■■'' ■-■ ■•■''■#''?"!■' ! T' The Chairman: I made no reference to loan. A Shareholder He carefully omitted it. Mr. Kebbell said it was a question whether that was business that the Bank should undertake; while there werelanre profits in un,-

derwriting there were also large losses. The exjienses for depreciation of guaranteed stock had been omitted. • -* .* ■','>- •' The Chairman? We'll be better able to do that when we know what their are. :■: The expense won't be met till July. « ' > « » Mr. Kebbeii: Mar I a«fc the ■ amount of money the Bank hasinvested, in Government! three per cents.? . The Chairman.- Ton may ask it. '■ ' ; ''"-■.' Mr. Kebbeii: You won't tell me? The Chairman: No. Mr. Kebble: What are they written down 5 to ? . ■ ~-,,,, : ' .;■-„, ..-,, ~:,.w:. The Chairman: lam not prepared to answer that.' ' •' ■■ 'V-y-;> '.:/:■ :••:-?,7. Later on Mr. Kebbeii said shareholders would like to know the amount the Bank had invested in the colonial Government's tbreo per cents. ' ' ■ ■ ■■ '" ' *•■'•'. I;" The Chairman said lie would git* every information to which he thought th« shareholders were entitled. Mr. Kebbeii: I ask a simple question. What was the sum provided for expanses? The Chairman: We have not given that. The expenses are not yet incurred. We have estimated a sum which might properly be set aside. '*~' Mr. Kebbeii: It might, for all we know, have cost £10.000 to float this loan. The Chairmanput it at a-quarter of that. Mr. Kebbell: That's all we want to know. The Chairman went on to urge that it would La unwise to publish all the internal economies of the Bank, or give a list of its securities. Dr. Newman ureed that the junior clerks in the Bank should be better paid. Other shareholders congratulated"the Board on the Bank's position, arid the opinion was expressed that the directors should receive additional remuneration. , ; ■ The Chairman said the Bank of New Zealand was only following precedent in making provision for depreciation of investment stock. No good purpose would be served by publishing a list of gilt-edged securities. The chairman went on to say thai; h; addition to the bonus substantial increases in salary had been given to junior officers this year. Mr. Beaur-hsi.mp pointed to the great depreciation that had taken place in ■ gilt-edged securities at Home, and said it was quite easy to understand why the Bank had to make provision 'for'depreciation. '" " ,' The report and ; balance-sheet were unanimously adopted, and a hearty vote of thanks was tendered to the directors, general manager, and staff of the Bank.