THE BANKING RETURNS.

New Zealand Herald, Volume LXIV, Issue 19762, 8 October 1927, Page 10

THE BANKING RETURNS.

With an excess of advances over deposits of £3,600,000, the banking returns for the September quarter are a w ness of the persistence of financial stringency. Deposits being lower by £770,000 and advances higher by £490,000, the position is worse to the extent of £1,260,000 than a year ago. Indeed, the excess of advances is unparalleled in any third quarter's return since 1921. Nevertheless, the latest return is, in two respects, more encouraging than its recent predecessors. The first is the amount of fixed deposits. For many years there was a steady growth in the amount of timedeposits held by the banks, every quarterly return showing an increase until in the second quarter of 1925 the aggregate was within £34,000 of £21,000,000. The latter figure was exceeded within 15 months, but during the interval there had been a substantial contraction and further fluctuations followed in the next six months. Early in May, the banks raised their rates, the salutary effect of this action appearing in the next statement in the increase of fixed deposits by £660,000 to £21,749,000. That was the highest level ever reached, but„ it has now been surpassed, by a further increase of £1,649,000 to the total of £23,398,000, both the increment and the aggregate being unprecedented in Dominion banking, particularly as fixed deposits are now actually greater than current account balances. The position appears to reflect a remarkable response to the banks' efforts to augment their resources, though it has probably been chiefly the result of free deposits being transferred to the interestbearing class, their total having contracted by £2,926,000 in the three months, than to the attraction of funds from any other repository. While total deposits aro lower %ian in the June quarter, advances have been reduced by £1,935,000, bringing them onco more well within the fifty millions. The net result is an improvement of £660,000. The movement appears small, but its significance is that in normal conditions there is a drain on banking returns in the spring month, usually reflected by a contraction to the extent of several millions* in fhe balance of deposits against advances. That has been the experience in the last four years. In 1922, when the country was recovering from the destructive postwar slump, there was an improvement from the second to the third quarter by £3,735,000. If the favourable movement now is less pronounced it is because the recent depression has been both less acute and more widespread in its influence, so that while the heights to be scaled aro lower the path is more difficult. The country. is still in the shadow of economic depression, but the banking returns show that it has made real progress toward brighter conditions. With the opening of a new season of abundant production, it may be confidently expected that the last stages in the progress toward recovery will be quickly and more easily accomplished*