BANK STATEMENTS.

New Zealand Herald, Volume LXIV, Issue 19608, 9 April 1927, Page 12

BANK STATEMENTS.

ADVANCES AGAIN INCREASE EXCESS OF £5,272,000 SHOWN. REDUCTION OF DEPOSITS. PURCHASING POWER DIMINISHED, j [BS TELEGRAPH. —OWN CORRESPONDENT.] WELLINGTON. Friday. An excess of advances over deposits of £5,271,996 is shown by the aggregates of j the average statements for the March quarter issued by the six banks trading j in New Zealand. A year ago there was an excess of advances of £982,662. The adverse movement comprises a shrinkage in free deposits, or current account balances, and a substantial increase in the advances. There is ( also an appreciable contraction in the j note circulation. These are all adverse' factors and are primarily due to the- fall in the prices of exportable farm pro- i ducts. j

Taking the three classes of deposits, the position as compared with the corresponding quarter of last year is as follows Mar.. 1926. Mar.. 1927. Decrease. Govt. .. £4,012.194 £3,095,271 £916.923 Free . . 26,865,851 £4,440,778 2.425,073 Fixed . ■ 20.436,629 21.088.034 *651.405 JE51.314,674 £ 48.624.083 £2.690.591 * Increase. Distribution of Deposits. The decline in the free deposits is substantial and all the banks showed smaller balances, as will bo seen from the following table:— FREE DEPOSITS. Bank. Mar., 1926. Mar., 1927. Decrease. N. Zealand £12,588,483 £11,608,489 £981,994 Union . . 3,176,309 2,884,090 292,219 N.S. Wales 2,853,563 2,493,840 359,723 Australasia 2,669,424 2,311,558 357.866 National 4,639,189 4,213,491 425,698 Commercial 938,883 931,310 7,573 Totals £26,865,551 £24,440.778 £2,425,073 These are the deposits against which cheques are drawable, and therefore the spending power of the customers of the banks is £2,425,073 less than in the corresponding quarter of last year. The fixed deposits show a small increase in which all the banks except the Bank of Australasia shared, as will be seen by the following table:— FIXED DEPOSITS. Bank. Mar., 1926. Mar., 1927. Increase. N. Zealand £10,415.869 £10,677,389 £261,529 Union . . 2,261,919 2,396,633 134,714 N.S. Wales 2,685,104 2,791.255 106,151 Australasia 1,741,818 1,708,115 *33,703 National 3,027,724 3,138,494 110,770 Commercial 304,135 376,139 71,944 Totala £ 20.436.62S £21,088,034 £ 051.405 'Decrease. The aggregates of the free and fixed deposits for the March quarter of each of the last five years are as follows: March Quarter. Free. Fixed. Totals. 1923 . . £26,445,502 £17,020,414 £43,465,816 1924 ~ 28,436,163 18,597,130 47,033,293 1925 .. 39,765,517 -20,131,711 49,897,228 1926 .. 26,865,851 20,436,619 47,302,470 1927 . . 24,440,778 21,088,034 45,528,812 Heavy Demands on Banks. The demands on the banks for accommodation show an increase of over £2,500,000, compared with the corresponding quarter of last year. While five of the banks show substantial increases in advances, the Bank of Australasia exhibits a shrinkage of £19,078. A com- j parison of the advances by the several banks is disclosed in the following table:—

Bank. March, 1926. March, 1927. Increase. N Zealand £19,941,342 £21,352,809 £1,411,407 Union . . 5,836.695 0,170,913 334.218 N.S. Wales 5,972,249 6,253,709 281,460 Australasia 4,903,774 4,884,096 *19,078 National 8,494,319 8,828,880 334,501 Commercial 1,223,924 1,448.182 224,258

Totals . £46,372,303 £48,939,180 £2,566,886 'Decrease.

The average of the discounts for the quarter was £1,861,619 as against £1,912,839, a decrease of £51,220. The aggregates of advances and discounts, £50,800,808, is very much larger than in 1923, 1924 and 1925, which were years of comparative prosperity and traders and others did not find it necessary to borrow from the banks. It is instructive to strike a balance between the deposits, which represent the borrowings of the banks from the public, and the advances and discounts, which represent the loans made to the public. The aggregates for tha March quarter of recent years are as follows: March Excess of Quarter, Deposits. Advances. Deposits. 1923 ..'£43.465.816 £42,521.573 £944.243 1924 .. 47.033,293 44.403.524 2.629.769 1925 49.897.228 43.730.262 6.166.966 Advances. 1926 .. 47.302.480 48.285.142 982.662 1927 . . 45,528,812 50,800,808 5,271,996 Comparison between the excess of deposits in 1925 and the excess of advances this year shows the great change that has come over the situation. For such an. excess of advances, we must go back to 1922, when the amount was £6,130,925. Note Circulation Reduced. The note circulation and the coin and bullion for the March quarter of the last five years hava been as follows: March Quarter. Circulation. Coin and Bullion. 1923 .. £6,532,182 £7,929,267 1924 . . . 6,600,969 7,877,259 | 1925 . . 6,694,046 7,727,905 j 1926 >. 6,830,982 " 7,791,455 1927 . . 6,603,681 7,875,043 The note circulation has contracted by £227,301, while the amount of the coin and bullion has increased by £83,588. The spending powor of the community may be measured by taking the amount of the free deposits and the note circulation. Against the deposits cheques may bo drawn, while the notes are in the pockets of the people, available for immediate expenditure. As compared with 12 months ago, the total is less by £2,652,374, and, compared with 1925, it is less by £5,415,104. The returns speak for themselves, arid their tale is not satisfactory. The position is, of course, not any worse than it was in 1921 and 1922, and just as we recovered from the depressing circumstances of those years, so we shall again, if we follow the right economic course.