BANK OF NEW ZEALAND.

Otago Daily Times, Issue 9546, 30 September 1892, Page 3

BANK OF NEW ZEALAND.

(Fhom Oon Own Correspondent.) London, August 12. The Bank of Ne-.v Zealand meeting on Wednesday was held, as usual, at the Camsou street Hotel, and went off in an agreeably unsensational manner. The chairman (Mr Glyn) felt he was standing on sulid ground, and was therefore able to adopt a toue of studied moderation, equally in contrast with the bootless optimism or too extreme pessimism of past years. It will be interesting to those concerned with the Bank of New Zealand to learn that Mr Glyn hopes at a very early date to visit New Zealand and make himself acquainted with the bank's prospects and position on the spot. In his introductory speech at the meeting he said: —

Gentlemen, I presume you will take the report as read, as it has been in your hands same days.—(Hear, hear.) When I had the pleasure of presiding at the interim meeting in February last I was able to express to you the opinion of the board that the bank, though progressing, perhaps, somewhat slowly, was progressing satisfactorily, and I am glad to be able to commence my remarks to-day by stating that no hitch has occurred, nor is there any reason why we should alter the opinion I then expressed. But if you will be good enough to follow me for a minute through the balance sheet you can form your own opinion, and probably that will be even more satisfactory than taking my word for it. Turning to the liability side first, you will see the capital is put clown at L 900,000, which is some L 200.000 in excess of what it stood at last year, when there were certain outstanding calls to be collected, wliich I think I said at the time were in process of collection. These have been paid up, and the capital stands at its proper figure. The next item is that of notes in circulation, which shows a small falling off of some L4OOO. This figure includes the circulation of the bank both in New Zealand and in Australia, and it is in Australia that the falling off has occurred. Naturally, oiving to the condition of affairs in that country there has been a general contraction of the currency, and I believe I am not incorrect in stating that even the very large Australian banks have also had

some contraction in their circulation; but as far as we are concerned in New Zealand, nothing could be more satisfactory, for our circulation has never been so large since 1888. The total

increase of the circulation of all the banks trad-

ing in New Zealand has been L 48,000, and as of that iucrease this bank has taken L 38,000, I do not think we have very much to grumble at.—(Applause). The next item is that of bills payable in circulation, which shows a fair increase, and is, in its' way, satisfactory, because it shows that the credit of the bank Is improving, and that there is more demand for its bills thau used to be the case. I may say that we have been very careful, and have not

in any way pressed our bills on the market, so that whatever increase in our bills payable appears in these accounts is not owing to our having pressed the bills, but is due to more demand for our paper than before. The

next item, "deposits and other liabilities, L 7,363,04-5," requires a little explanation. It is less by L 73.000 than it was last year; but, first of all, let me say that it includes Government deposits and current and fixed deposits from the public. It so happens that at the date of the balance sheet in 1891 we had a very large amount of Government money in hand, for no particular purpose or special reason that lam aware of. It so happened there was that amount, otherwise the present item would have shown a very considerable increase; for I am very glad to be able to say that the deposits of the bank during tho past year have increased. You know there has been a great deal of anxiety here amongst depositors, owing to the numerous failures of banks into which they put their money, aud the lock-up there has been, which must have inconvenienced many of them, wiihthe possibility of loss. We, too, have lost deposits, partly owing to the death of old depositors and partly to the general distrust ..which appears to prevail. But in Now Zealand, where necessarily they know all about us, the increase of deposits has actually more than compensated for the smaller amount we have received in this country. That, I think, is about as satisfactory a statement as I shall be able to make to-day.—(Applause.) The result of this, of course, has bseu that to a certain extentwe have been transferring our deposit liabilities from England, where, perhaps, they are not an unmixed blessing, to New Zealand— that is to say, we have been taking our liabilities over to where our assets must necessarily be. If you turn to the other side of the balance sheet you will see that the coin, cash balances with bankers, and money at call aud shori notice is less by some L 200,000; but, of course, we have more or less money on hand at the particular date of a statement. That amount is ample, aud our general manager is constantly advisingus of the care he takes to ,keep the bank in a strong financial position. ' The next thing is bills receivable and bills discounted. These are lumped together on this occasion. They show about L 94.000 increase, and there is so i much new business ; but the next item is the I one which gives you the best idea of what the bank has been doing—the advances and other debts due to the bank, which stand at. I L 4.092.730. That shows an iacrease of L 300,000, all of which practically is in New Zealand, where I think it is considerably safer to lend money than in other colonies. The only other item to refer to is " the landed properly, bank premises, &c," which shows an increase of L 2700. This arises from necessary improvements and alterations to bank premises, which are set down at some L 150.000 under what they were valued at when the change in tho management Hook place. The net result of the year's working is L 60,053, to which we have to add what we carried from last year, which is L 18,272, leaving us L 78.330 to deal with ; but of this we have taken L 15.000 for reserve fund, and invested it in consols. That is one of the things we are allowed to do under our deed of settlement, without consulting the shareholders; but I have no doubt, from the many remarkß we have heard at these meetings, tuat the shareholders will most heartily approve of that course, being pursued. Then we paid an interim dividend, which absorbed L 22.500, and we propose to ask your sanction to distributing a similar amount this time, making 5 per cent, for the year. You will notice that last year we put L 20.000 to reserve, but in that year we only paid one half-yearly dividend instead of two. That leaves L 18,330 to be carried forward. I do not know that I can give you any particular reason why we should carryforward so much, being about 2 per cent, on the capital, except that I am certain that the proprietors would not approve of a dividend at a higher rate than 5 per cent. It is pleasant also to have money in hand, and it is just as well to carry it forward and decide what to do with it later on. Now, I think, although this balance sheet is not very brilliant, perhaps you will not think it altogether unsatisfactory considering the state of things. Of course, the natural criticism which arises is this: " Why, having done more business, don't you show us a corresponding amount of more profit P Has it arisen from increase of expenditure, or what docs it come from ?" As regards the question of expenditure, it, of course, is one of very great importance to any bank, particularly a bank with such a- large number of branches and agencies as we have. We have gone into the matter very carefully, and have compared our expenses as well as we could with those of other institutions which have a very large number of branches, and I am bound to say that, on the whole, ours have proved to be exceedingly moderate. Of course, we could do a much larger business if we had it with the same staff, but I do not think we could do the same amount of business and, at the same time, do justice to the bank if we reduced the staff. The reason why we do not show a larger amount of profit is practically this ■ the policy the bank had to adopt had to be a very conservative one — you may call it over-conservative, if you like ; but the fact of the matter is that what we had to do was not so much to attempt to make large profits as to avoid making losses, and this means selecting your business and getting a less margin between what you pay for your money and what you get for it than if you were a little less circumspect in the business you took, and I do not think you ought to bo disappointed or led away with I the idea that the great thing to see in this j balance sheet is large profit. A large profit very ofci;ii means a considerable risk, and I think our object here is to get along slowly, without aiming at large pro/its, but aiming at getting a regular, steady business, and then, if you can be clear of loss—you cannot, more than other peDple, keep entirely clear tf loss, —but if

you keep reasonably clear of losses, the proiits will take care of themselves.—(Hoar, hour.) Of course, this result, whatever you may think of it, lias not been arrived at without a considerable amount of work and, I think, anxiety on the part of the stait in the colony, and I am glad to beable to give expression to the board's appreciation of the services of our general manager, Mr Holmes, the gentleman appointed two years ago. I think the conservative way in which he has conducted our business is admirable, and I should also like to bear witness to my appreciation of the zeal and fidelity with which all the other officers of the bank, from the highest to the lowest, have worked for our interest during the past year.— (Applause.) The next thing I have to allude to is the Estates Company. This is the first time we have had a complete balance sheet from the company, and I think it is, on the whole, fairly satisfactory. The result shows an improvement on the estimates formed by Mr Keeuc when the profits were handed over to the limited company. Some of you may remember that in February I told you that it was intended to hold a'very large sale of properties in the South Island. Well, this sale did not in its entirety come off. There wero very serious floods, as you are probably aware, and that very much crippled some of the small farmers to whom we looked a good deal to be bidders at these sales ;so that the local board, acting on what wo consider war, a very wise judgment, determined to very largely curtail the auction, and the result was that only two properties were put up for side. Of these, one met with considerable competition, ami sold very well. It fotelieil a price which was considerably in excess of that at which it was taken evei1; but the other met with little or no competition. Some have been sold privately since

and 1 understand that it is not anticipated that there will be any difficulty in completing the sale by private purpose. The purchasers of the properties that did sell were mostly people who had property bordering on the neighbourhood. -Lue sale did not attract buyers from a distance. As iar as the sale went, it was good enough, but of coukb it was n small affair compared with what was orginally anticipated it would be. Ono thing that rather appears to have affected the s:;lo was the fact that there was a great quantity of improved Ctwn lands offering at the time under the p irpcfciud' lease system and that seems to have met the demand that there was for land. The total sales of the properties of the Estates Company up Lo data amount to something over L 550,000. That is ot course, by no means all cash ; but it at least fixes the value of the property. No policy h-;s yet been adopted, I believe, by the B,lates Company board as to redeeming the debentures ; but of course the one thing which weighs upon the Estates Company is the high rate of interest paid on their debentures—viz SJ, per cent. There is no doubt that at the time the banlc wanted the money it was very glad that the debentures should be at that rate of interest, and that it was under an obligation to those gentlemen who took the trouble to place the bonds; but now that the income has been proved to be a great deal more than sufficient to pay the interest, and it has been ascertained, more or less, what the value is by absolute sales, we do feel it a little onerous. I do not know that anything can fee done at the present moment; but I hope when the company gets a little more established they will be able to make some arrangement to pay off the existing debentures, replacing them by others—or partly replacing them—which will bear a lower rate of interest. The only other matter in reference to the Estates Company that I have to mention is this : Recent experiments seem to have proved that the company has a very valuable mineral property, which was taken over at a merely nominal figure. Of course the ore is at present in the ground, and it would be premature to say much about it; but, from what we can learn, there are certain possibilities, or, it may be, probabilities, in it.—(Hear, hear.) I do not propose to take up your time with a general statement of the position of New Zealand. In the first place, the daily press keeps us so well posted with what goes on abroad that anything I could say would probably be stale ; in the second place, the literature in regatd to New Zealand, pro and con, is so extensive in these days. But I may say generally that our advices are that the general outlook is sound and improving. I have just a few figures here, which, I think, may interest you. There is the land settlement, for instance. In 1892 there were 1,728,983 acres taken up by 3779 settlers, in 1891 there were 2,107,735 acres taken up by 2063 settlers; so that, although the acreage was something like 25 per cent, less taken,' the number of settlers who took up that acreage in 1892 was 75 per cent, more, which, I think, considering that what New Zealand wants is population, is a very satisfactory feature.—(Hear, hear) The exports for 1892 showed a falling off compared with 1891, owing in that year to the very large amount of coin—some L2lo,ooo—which was included in the exports. The correqted figures for three years may interest you. : Iv 1890 the exports were -1*9,407,700, in 1891 L 9,4-28,900, and in 1892 L 9,576.300. Thus the ratio of increase from 1891 to 1892 was a great deal larger than that from 1890 to 1891. Of course, everything seems to have increased in staple exports except wheat, and that, I suppose, is owing to the inevitable floods which always occur when any good harvest is coming on. : All of you know of the enormous increase in the mutton trade; but I do not know whether gentlemen are equally aware of the extent of the dairy products. The value of the dairy products last year was U,W0,000, and that actually exceeded the value of the output of gold by 1,34-0,000. I think that is rather an

interesting piece of information. I can only repeat what I said just now—that, as far as we able to gather, although of course, there is no boom in the colony, nor do I see much chance of one, ytt the country seems going along, and I think the prospects of tho bank, provided we go steadily, are good. I do not think there is anything else that I have to say, except in reference to a matter which is rather more personal than anything else. I have never been in New Zealand, and I have a great desire, of course, to make the acquaintance of the officers of the bank,, aud find out for myself how the business is conducted, and to generally get information. Matters in the bank now have got iv so good a shape that I can be easily spared as far as work is concerned, and my colleagues have been good enough to give me leave of absence ; therefore, I intend, if nothing happens, to spend a portion of the winter in the colony. Prub ib!y I shall not have the pleasure of presiding at the interim meeting in .February, but I hope to meet you next August, and, perhaps, be able to give you generally my views of the position of things out there, fur what they are worth.—(Applause.) I will now move the formal resolution—"That the report and balance sheet, as presented to the meeting, be received and adopted, and that a dividend be declared at the rate of 5 per cent, per annum for the half-year ended March 31 last, making, with the interim dividend paid iv February, 5 per cent, for the year."

The Right Hon. Sir James Fergusson, G.C.5.1., K.C.M.G., MR, seconded the motion, which, there being no discussion, was put and carried unanimously. The Chairman moved the re-election of the retiring directors, Sir James Fergusson aud Mr E. Herbert Fison. The Right Hon. A. J. Mundella, M.P., seconded the motion, which was agreed to. Sir James Fergusson acknowledged the compliment, and expressed his pleasure that, after having seen the bank through its bad times, he now s«.-.v it looking up. , Mr Chamiing Bsdaile proposed hue re-election of Messrs Edwin Waterhouse aud George Sneahh (Price, Waterhouse, and Co.) as the auditors, and the motion was seconded by Colonel Watson and carried. On the motion of Mr Carter, a vote of thanks was accorded the directors and officers of the bank for fcheir services during the past year. The proceedings then terminated.