THE BANKING POSITION.

New Zealand Herald, Volume LX, Issue 18294, 10 January 1923, Page 6

THE BANKING POSITION.

;. Although the proportion between deposits and advances disclosed by the banking returns or the Decemberf quarter cannot/be described as normal, the figures indicate a degree' of stability that must be regarded as satisfactory; ,„ There is an excess ot\ advances of £2,326,597, equivalent to nearly 6 per cent, of the ; deposits, whereas pre-war . experience suggests about half that ratio ■■■:•: as . the:, normal "condition for ; the December quarter. The improvement within the past year is, however, of greater importance than comparisons '. with "standards that are practically so remote. In comparison with the returns for the December quarter of 1921, the pre- j sent statements show a reduction in j the excess of advances by nearly twothirds. Private deposits are larger I by : onlyv £169,000, :progress having been almost wholly by the reduction of debts to the banks, to the extent j of £4,128,000, or nearly 9 per cent.- [ The comparison with • the previous quarter does not appear so favourable, The September figures.showed an excess of advances over deposits of only £1,032,584, and the retrogression to more than double that figure is striking. - The movement is probably wholly seasonal. On the one hand, the decline in free deposits of £955,000 (against which fixed deposits have increased by £98,000) is attributable to payments for , importations for the summer trade, and is consonant with the adverse trade balance in recent months,; on the other, the increase of advances by £436,000 is due to the financing Of spring production. The latter figure is obviously not the full measure of the seasonal demand for accommodation; its smallness may be interpreted as evidence that debts outstanding ■ in the previous period have been substantially . reduced, and their place in the returns taken by new loans. K There is therefore nothing disturbing in the ; apparently unfavourable movement. Accounts that have been reduced by payments for imports will: presently be replenished by the realisation of stocks, while loans against, produce shipments will; in their turn be repaid, the process leading to the usual strong position in the March returns., ;y. .'/,'. ' r ■