BANK'S OPERATIONS.

New Zealand Herald, Volume LXVII, Issue 20596, 21 June 1930, Page 16

BANK'S OPERATIONS.

PROFITS ON LONDON FUNDS. LARGE INCREASE IN ADVANCES. LIBERAL POLICY PRACTISED* [BY TELEGRAPH OWN CORRESPONDENT.] WELLINGTON. Friday. The annual meeting of tho Bank of Now Zealand was held to-day, tho chairman of directors, Sir Georgo Elliot, prosiding. Reviewing tho year's operations, tho chairman said there was a decrease of £42,043 in total deposits. Fixed deposits increased £2,357,154, almost entirely in very largo short-dated deposits which, being subject to early withdrawal, cannot bo safely utilised for ordinary advances. Current account deposits decreased £2,399,197, owing mainly to customers drawing on their balances to meet conditions arising out of tho unfavourable export season and to tho Government 5j per cent. loan. Tho actual net earnings for the year wero well in excess of tho figures for tho previous year. In view, however, of existing conditions it had been "deemed advisable to make much larger provision than usual for doubtful advances. During tho greater part of tho year the bank had a large amount of funds employed in London on which it obtained much higher rates than usual, and profits had been further augmented owing to the increase in advances. By tho end of the year these funds had been reduced by £5,715,719 in comparison with tho total in the previous balance-sheet, this indicating the acuteness of the London exchange position and the necessity in good times of building up ample reserves in London against the lean years " which sooner or later are bound to come." Early Maturity of Securities. Remarking that coin, cash balances, and deposits with bankers are £408,539 less than last year, the chairman said that as over £2.000,000 of New Zealand and Australian Government securities are falling duo before the end of this year, it was not worth while selling any of them to replenish cash balances that were sufficiently large for immediate requirements. Tho bank's holdings of British, Australian and New Zealand Government securities and debentures of New Zealand local bodies stood in its books on balanco date at £12,749,069, a figuro well under the market value. Advances and bills discounted showed nn increase of £6,268,132, of which over £4,500,000 was in respect of business within the Dominion. This is the largest expansion in any one year since 1921, when advances and discounts rose by 11 millions to £30,500,000. The position has been brought about, just as it was in 1921, by a shrinkago in the value of exports coupled with an over-importation of goods. "It is probable that advances may further increase until next season's produce returns become available, and until tho effect of a lower scale of importation makes itself felt," said Sir George Elliot. "No applications for and legitimate accommodation havo been refused but in view of the unsatisfactory outlook it has been necessary to use the strictest discrimination in lending. Apart from tho largo amount of our direct advances to farmers and their various organisations, we have rendered the farming industry indirect assistance by taking up £BBO,OOO of rural advances bonds. A largo amount of the bank's resources are kept in liquid and readily realisable securities, consequently there is no need for lis to curtail the accommodation we have been affording our customers." Payments to Government. Announcing that tho dividend and bonus would bo payable to-morrow, the chairman said tho total distribution to ordinary shareholders for the year would b9 £572,656, while the revenue derived by the Government amounted to £540,154, comprising dividends on share capital, £245,312; income tax, £168,561; land tax, £17,996; and note tax, £108,285. The bank holds £3,391,160 of 4£ per cent. New Zealand war loans on which no tax is pavablo.

The chairman's motion for the adoption of tho report and balance-sheet was seconded by Mr. R. W. Gibbs, who remarked that with tho upward movement in advances of approximately £6,000,000, an increase in profits of only £35,000 might appear to need somo explanation. Since free deposits had decreased over two millions, and been replaced by interest-bearing deposits of about tho same amount, tho explanation was simple.