BANK OF AUSTRALASIA

Otago Daily Times, Issue 17943, 24 May 1920, Page 6

BANK OF AUSTRALASIA

INCREASED DIVIDEND. DOMINION PROSPERITY. (Feom Ocit Own Correspondent.) LONDON, March 30. Mr C. G. Hamilton presided at "the eignty-sixth annual genoral meeting of the j Bank oi Australasia, and he mentioned that the present occasion was the first tune that accounts for a whole year had been placed betore the meeting. This new departure had been inaugurated with satis- | factory figures. The profits, after writing <<0,.u .nvestments at tne date of the balance sheet, to market price or lower, and providing- for a bonus to the staff and the pensioners, and adding £100,000 to the reserve fund, were sultioient to justily an increased distribution to the proprietors by 1 per cent for the year—effected by increasing the final distribution by 2 per i cent, for the half-year. Without binding ! themselves, the present policy is to make tlie two distributions equal. Nominally the dividend had increased only 1 per cent, yet if the great increase in the rates of income tax sinco 1914 and the fact that distribution was paid free of tax were taken into consideration, the real increase in the rat© of dividend was about 4 per cent. A 15 per cent, bonus had been given to j tho staff. That might be considered a ! special peace bonus, and in it had bc«n inj oliided their pensioners, many of whom had i felt severely the pressure of Idle present high cost of living. COMPARISON OF ACCOUNTS. r lhe accounts of the first year of peace were interesting compared with toe accounts for the year ending October, 1914, practically tho last yea* betore the war. Dej pos.ts showed am increase of over £5,000,000, I or 26 per cent., and stood at i^dOi^WH-<a record figure. The capital shown in the two balance sheets wae tlie same. The reserve had risen by £400,000, all provided out ot profits. The charges had increased by 27 per cent., the taxes by £138,500, or 185 per cent. The holding of specie, bullion, and notes in Australasia had increased by £1,348,000, or over 25 per cent., and represented now nearly 28 per cent, of the liabilities in Australasia—a very strong position, and one which did not take into account liquid resources in London, which were much larger tihon the liabilities here. Practically all the liquid resources in Australasia were lield in Government notes, and according to the return made in September, 19xa, the gold held by the commonwealth against its note issue was 43.52 per cent.—a gold reserve that they would be very glad to se3 here. The increase in deposits was a feature common to all Australasian banks. From September, 1914, to September, 1919, the deposits in all the banks, including the Common wealth Bank, increased by over £104,000,000. The increase was naturally greatest in the Commonwealth Bank, which, as tho Government bank, received the proceeds of the various -war loans, but tho Bank of Australasia got fully its share. GOVERNMENT PURCHASES!. The large increase in deposits was mainly due to the large Government expenditure in Australia and New Zealand, and the consequent inorease in trade arising indirectiy therefrom. But the boom in trade in Australasia had been nothing like the boom in trade here, where irost of the w.;r exp?nditure was spent, and the profits made by the community in Australasia were by no mea-ns excessive. Most of their principal products were bought by th-s Government at fixed pric<«. This policy was, on tho whole, a fortunate arrangement for the producers of wheat, nic-at, butter, cheese, etc., as otherwise much oi their produce would not. have .been shipped or sold owing to the scarcity of freights. The wool-grower was in a. somewhat dff--ferent position, for wool Government had to bring home for clothing our own forces, as well as those of most of the Allies, and tho population; therefore the wool producer in Australasia felt naturally rather disappdinte4 When he read that his wool was realising hei*3 over COd a lb, and he compares that with the average price of 15id per lb, which he, received. The bank's policy of strengthening reserves had always been a Ifading feature, but it was more desirable now than ever. . RISK QF OVER-TRADING. For the last five years there had been throughout the world a gigantic amount of unproductive expenditure, with the result that there was now a great shortage of tho necessities and luxuries of life, and the oost of everything had increased greatly. Manufacturers were now full of orders, and the demands! for orcdit were enormous. Most of the demands were quite legitimate, but there was a distinct risk that tlie profits now being made might lead to over-trading, and produce a subsequent collapse. Foreign exchanges were in such a ohaotio state that it was very dcffiouH for manufacturers here, or, producers in Australasia, to sell (So the Continent, pxcont on rrrdi* , . A! 1 t.hosf factors made it imperative that banks should stiengthen their resources, both to meet tlie legitimate demands for credit, and to provide for contingencies. PROSPECTS OF CURRENT SEASON. In oousequenco of a severe drought affecting many ports of Australia,, tho exportable surplus of Australia's chief primary products would be much reduced The wheat harvest will be a very poor one, leaving little, if any, margin for export, and the wool clip must be greatly reduced. On tho other hand, the price to bo pajd" for the wheat had been increased to 5s a bushel. The reduction in the wool clip should not seriously affect tho available supplies, for there- was in Australia and New Zealand a bugo amount of wool already purchased by fch© Government representing part of the caps oi io. iner seasons still to tw shipped. It was almost certain that the Governments both in Australia and New Zealand would have to_ issue further largo loans this year, and their bank wpidd have to do its share in subscribing and assisting its customers to subscribe to these loans. Conditions in Now Zealand were favourable, and the wonderful prosperity of tJao dominion continued unchecked. During the laet five years its exports had averaged' £10,000,000 more than its imports. CAPITALISATION OF RESERVES. The Chairman moved—"That the capitalisation be authorised of £1,000,000 of tfiat portion of the reserve fund which 6 represents premiums on past issues of new capital, by the iesue of 25,000 fully-paid shares to the proprietors, pro rata." Until their authorised capital had been increased by tlie recent supplemental cha.rt«r the directors had , no powo r to create more capital, but now that they had the power they recommended the capitalisation of £1,000.000 of the reserve. Lord Aldenhani seconded the motkww

The retiring directors (Sir Howard A. Stuart, Mr Frederick V. C. LivingstoneLearmouth, and Mr Harold Nelson) were re-elected, and the meeting closed with votes of thanke to the staff and the chairman.