SAVINGS BANK LOANS

New Zealand Herald, Volume LXXIII, Issue 22518, 8 September 1936, Page 8

SAVINGS BANK LOANS

Anyone acquainted with the record and methods of the Auckland Savings Bank as an investor will support the claims that it makes' in rebuttal of criticism by the Minister of Finance. The bank has done a very great deal over a long period of years not only in the way of housing loans but in farm loans. The bank has been a very good and reasonable mortgagee. The voluntary reduction of interest to its borrowers, referred to in the statement, has been gratefully experienced by many. Such a proceeding completely clears the bank of any charge of putting profit first in its policy. At the same time the trustees are entitled, indeed bound, to put the interests of depositors first, to invest funds so that they are wholly safe, and to conduct the business of the bank so that its soundness will be beyond question, its reputation free of .the slightest doubt. It pays 3 per cent on money deposited. There should not be much doubt, therefore, that it cannot lend unlimited sums at 3| per cent, meet the costs of administration, keep the prescribed proportion of its deposits liquid, pay income tax at a mounting rate and still make a profit. The amount of profit may not be important, but for very good reasons the trustees should avoid incurring any loss on the year's working. The bank has, as the statement shows, lent considerable sums to local authorities at 3i per cent. Even in the instance which provoked the Minister's criticism it was not the interest rate alone, but that combined with a long term for the loan, which made the bank hesitate. If, bearing in mind its heavy responsibilities to depositors, and increased charges to be met, the trustees impose a limit on the amount to be lent on long term at 3l per cent, it does not follow that the motive is a desire to force intei-est upward.