DOMINION BANKING.

New Zealand Herald, Volume LIX, Issue 18215, 7 October 1922, Page 11

DOMINION BANKING.

DIFFICULTIES OF THE TIME.

COMMENT itf LONDON. Dealing with the subject of banking in the Dominions, the Financial Times writes: — "In the British Dominions we have the spectacle of fully-equipped and alert banking organisations insufficiently employed. The experience is by no means confined to them, but the situation and its con-1 sequences are peirhaps more conspicuous i i in the Dominions because these countries | I are normally progressive, and their banks j are far-seeing institutions which rather | I anticipate than lag behind the developJ ment of production and business. Fore- ! sight and prudence in banking practice have by no means received proper reward. "In recent years many banks in the Dominions, like those at Home, have; added to their capital, and almost in- j variably on terms which have reinforced the reserves at the cost of the shareholders, with the object of enlarging the basis of security behind the depositors. So, when in place of expanding, as is the usual course, their business has been curtailed by the check to world-wide commercial movement, the retrogression in profits has in a number of instances reacted sharply on dividends. The older banks have escaped this contingency either by reason of having been able to amplify their undivided balances brought from more fruitful times, or through having no occasion to provide for depreciation on the investments accumulated during prolonged careers. The nastiest jars have been suffered by banks operating in the newer or least consolidated Dominions. " Bank reports, like those of other enterprises, mostly tell their tales in skeleton, but we have lately had some freely expanded commentaries from chairmen, and from these it is plain that in Australia, New Zealand, and Africa, both south and we£ t —the troublesome conditions have been essentially the same. Canada's situation is not wholly dissimilar, but tends more to resemble and re-echo happenings in the United States." Turning to New -Zealand, the wpter remarks : " A pretty, sharp setback in profit was undergone by the Bank erf New* Zealand in the year to March 31, but the decline of £145,200 was of little moment, seeinc that £214,700 more was -brought in. The dividend was actually the same as for the preceding year though the rearrangement of the capital account led to the rate being called 13 1-3 in place of 16* percent. Appropriations were the 6ame as in 1921 —£150,000 to reserve and £50,000 off premises—and the carry forward was swelled by £69,500 to £430,930. The reserve is now £1,525,000. " Banking conditions in the Dominion were so exhaustively and clearly explained by Mr. W. Pember Reeves at the meeting of the National Bank of New Zealand, that we need not, go over the ground again. The National Bank is in course of increasing its cspital from £1,000.000 to £1,250.000, and its reserve from £1,050,000 to an equality with the capital, so it is. evident that the rather unfavourable results of the past year, the fiftieth of the bank's existence, arouse no misgivings respecting the future. The profits receded £114,100, but all of this was made good by the larger balance brought in and by the saving of £75,000 devoted to investment depreciation a year before, so that the undivided 'balance was substantially reinforced."