THE BANKING POSITION

New Zealand Herald, Volume LXXI, Issue 21972, 1 December 1934, Page 10

THE BANKING POSITION

Since the Reserve Bank commenced business at the beginning of August, a new form of return showing the position of the trading banks has been made available. A statement of the assets and liabilities at the close of business on the last Monday in each month has to b« made to the Reserve Bank, and a summary of the figures is subsequently gazetted. Four of these returns have now been published, for one was furnished showing the position at July 30, just before the Reserve Bank opened its doors. The latest to appear, covering the situation on October 29 shows a state of abnormal banking strength for this season of the year. The free and fixed deposits combined exceed the total of advances by £19,531,000. The excess is some £5.500,000 less than it was at August 27. In the period between these two dates deposits fell by nearly £3,500,000 and advances increased by some £2.000.000. Comparisons with the position last year are not of any great value. Only average statements were made in the quarterly returns then issued. In addition, the transfer of the Government account to the Reserve Bank, the repayment of the Treasury bills the banks held and the creation of bank deposits with the Reserve Bank have all combined to alter the situation. From consideration of the four monthly statements made since July, some, if slender, evidence of n movement in business activity can be found. The advances fell substan tially between July 30 and August 27, but they have been increasing since. This is in accord with the movement that used to be expected in the JuneSeptember quarter, when heavy demands were made on bank accommodation to finance seasonal import trade. The rise in the volume of imports indicated by customs and trade returns is thus reflected in the banking figures. In the period considered the fall in deposits already noted has been in those bearing interest more than in current account, balances. However, in spite of these slight movements the banks are equipped to do far more in financing trade and industry than they have been able to do. Besides their preponderance of deposits over advances, they had, at fhe date of the last return, combined credits with the Reserve Bank totalling some £12,677,000. Their legal requirements to cover their liabilities at that date were about £3,000,000. With such a situation the willingness of the banks to increase their advances, given acceptable applications, need not be questioned for a moment.