BANK OF NEW ZEALAND.

New Zealand Herald, Volume XLV, Issue 13925, 5 December 1908, Page 6

BANK OF NEW ZEALAND.

SATISFACTORY HALF-YEAR.

DIVIDEND OP FIVE PER CENT.

[BY TELEGRAPH.—MIESS ASSOCIATION.]

Wellington", Friday. Mr. Beat/champ, chairman of the Bank of New Zealand, speaking at the half-yearly meeting to-day, said: "As is customary at half-yearly meetings no statement of account* will be presented. In this connection I am pleased to inform you that tho profits of the bank for the six months ended September. 30 last are exceedingly satisfactory, and there is every reason to anticipate that the current financial year will compare favourably with any of its predecessors. From the recently-published banking returns for the September quarter you will have noticed that the combined advances and discounts of the banks transacting business in the Dominion are the highest on record, these being at September 30, 1908, £21,217,959, compared with £18.498,184 at the same date last year, an increase of £2,719.775. During the year ended September 30, 1903, private deposits decreased by £1.344,995, and Government deposits by £887,193, making a total change of £4,951,963. These figures are unquestionably significant, but I think they need not occasion anxiety as to the future. The altered relations between the banks au<l their customers are brought about by a sudden and unexpected fall in the values of wool and ajlicr primary products. While the high. I ssJ*y almost say phenomenal, prices were ruling for wool, etc., there was a large margin between the income and expenditure of producer*. This enabled them to carry on operations without leaning unduly on the banks or other financial institutions. Simultaneously, it prompted many farmers to increase their holdings of land (much of it being purchased on easy terms) at a price based upon the assumption that the fat years would continue indefinitely. The prosperity of the country districts' being naturally "reflected in the towns and cities, similarly affected the urban and suburban land values, and encouraged many wholesale and retail firms to trade beyond means, and gave rise to considerable* extravagance, leaving, with the cessation of speculation in land, a reduction of imports (winch cannot be brought about suddenly), curtailing credit. With more economy in private expenditure our financial equilibrium will ere long be restored. "Owing to the seasonable weather, the prospect* of agriculturists and pastoralists leave little to be desired. The country has never looked better than it does to-day, and there is a strong demand for butter and cheese at highly remunerative rates. I shall be surprised if the exports under these heads do not touch £2,500,000 before the close- of the present season. juirther, there is the gratifying fact that, compared with the prices ruling a few months ago, there has quite lately been a marked improvement in values "of all descriptions of wool in Europe, Australia, and "New Zealand. If the present prices for wool be maintained, it will materially assist in lessening the monetary stringency which has been felt throughout the Dominion during the past six months. We can scarcely look for a recovery in the prices of hemp, kauri gum, pelts, * and frozen meat, until trade revives in Great Britain and America.

"This time last year the Bank of England rate was seven per cent.; to-day it is j24 per cent., and money in London is a ding in the market. From day to day loans have been available at i to §■ per eent., and 1 per cent, is the charge for a week, whilst the working rate for three months' bills has been 1 7-16 per cent. In ) spite of these unusual monetary conditions, lit is still hard to float loans on account of public bodies, the reason being that the j British public are at the present time shy !of such investments, and there is a huge ' amount of undigested issues in the hands of underwriting syndicates and stockbrokers, j Until these are absorbed the public bodies ! in this Dominion cannot expect to receive i much encouragement in London. I refer I to this because several times of late the I question has been raised, why, with (he I Bank of England rate standing at 2£ pc? I cent., and money in ample supply, several Jof our harbour boards and municipalities have experienced any difficulty in respect j to their loans. • '

" Having regard to the steady growth of all branches of trade and commerce in New- ; Zealand, and the amount of money that is required for the legitimate .development of our resources, I believe the time is not far distant when it will be desirable to take into consideration the question of increas- i ing the capital of the bank, and thus bring i it more into line with' other banks repre-: sented in the Dominion. Ido not propose, j however, to deal with this subject to-day." Out of the profits of the bank for the: past half of the financial year, the board | has declared an interim dividend of five per cent, on both preference and ordinary shares. The dividend will bo payable to shareholders in Wellington on Monday next and at the branches on receipt of advice. QUESTION OF DIVIDENDS. • In returning thanks for his re-election to the directorate, Mr. Watson remarked: "In writing to me many shareholders have alluded to the present dividends being jo poor a return on the money paid in, and have urged that the'.position of the bank now warrants a fairer distribution. Some have 'pressed for a portion of the lost capital being replaced out of profits, others have 'suggested calls or fresh issues of capital at par, and a few have' expressed themselves as satisfied with the augmentation of the reserve fund. Now, while it is reasonable that well-to-do shareholders are satisfied to see the bank increase its resources by way of the reserve fund, the intrinsic value of the shares being thereby increased, it must be borne in, mind that many depend on dividends for means of living, and with them it is a case of hope deferred making the heart sick, for they have waited a very long time.'' Mr. W. Kennedy said that on one or two occasions he had indicated that his own preference would be for an increase of dividends at no distant date. The capital was divided into preference and ordinary shares. It was a peculiar anomaly that the smaller interests, so far as capital was concerned, had control of the dividends, consequently no matter what h*» roiirht say unless he

'.'"ld'get the other shareholders to agree with him it would be useless to discuss the subject thai day. .. Mr. T. S. Weston referred to the possibility in the near future of the question of increasing the capital of the Bank of New Zealand coming before the board. Speaking as a shareholder, and a large one, ho would like to have the assurance that any scheme brought forward would bo submitted to the shareholders, in order that they might have the most ample and the fullest opportunity of considering how that scheme affected their interests. THE CHAIRMAN'S REPLY. The chairman, in reply, dealt with the question of the relative positions of the Government and the shareholders. He considered that Mr. Kennedy had put the relationship in a light that was scarcely fair. Although the Government held only £500,000 preference shares in the amount of paid-up capital, it also held a guarantee of £1,000,000 in the direction of the liability of the colony, and was, therefore, interested to the extent of £1,500,000. It was impossible to get away from the question of repayments in 1915. Until the guarantee was extinguished the Government had a right to be represented on the board to the amount of the guarantee, plus the amount of share capital which it held. Mr. Beauchiimp complimented the representatives of the shareholders on their pertinacity in putting the views of shareholders before the board, and alluded to the general unanimity between shareholders and the nominees of the Government. He thought it was somewhat premature at the present time to deal with the scheme mentioned by Mr.. Weston. He Mould say, however, that whenever any scheme considered bv the directors should be brought down with the object of benefiting the bank as a whole, it would lie proper to consult both the holders of preference shares and the holders of ordinary shares. The meeting concluded with votes of thanks to the chairman and staff.