NATIONAL BANK OF NEW ZEALAND

Otago Daily Times, Issue 21736, 30 August 1932, Page 5

NATIONAL BANK OF NEW ZEALAND

ANNUAL MEETING , SIR AUSTIN HARRIS'S REVIEW' SIX PER CENT. DIVIDEND. (Froj* Our Own Correspondent.) LONDON, July 15. At the annual meeting of the National Bank of New Zealand the new chairman (Sir Austin E. Harris, K.8.E.) carried on the late Mr Pember Reeves's custom of giving a lengthy review of public affairs m the Dominion. "Before passing to the business of the, meeting," he said, "I would desire to,pay a tribute to our late chairman, Mr Pember Reeves, who for the past 14 years presided over the bank. His intimate knowledge of New Zealand affairs arid his love for the country of his birth were assets of the deepest value to us, while his great personal charm endeared him to a large circle of friends outside the bank. We deplore his death. " My colleagues have invited me to take his place as chairman, and we have appointed Mr Leo Myers to a seat on the board. Mr Myers's New Zealand experience will, we are sure, be of great value to the bank, and we welcome him as a colleague." , The chairman then spoke of the year of depression and great difficulty; of the low level of commodity prices, which was certainly the principal trouble affecting the welfare of New Zealand. EXPEDITING RECOVERY. Economic laws of supply and demand, combined with public and private economy, would doubtless in time work their own cure, painful and prolonged though the process might be; but they had to-day been tampered with by so many extraneous devices of man that it would not seem impossible to expedite recovery by rectifying mistakes that had been made and by removing some of the barriers, artificially created, which were hampering a return, to the normal. :' /»'.-• Referring to the Ottawa Conference, the chairman said it was the definite opinion of some of those who were to take a, leadinc part in these deliberations that New Zealand, with her unsurpassed primary products, should stand to reap the fullest measure of benefit, and their heartfelt good wishes will be with those Imperial statesmen on whom will fall the burden of responsibility at Ottawa, and whose, deliberations might bear results so momentous to the future welfare of the Empire. New Zealand would be worthily represented by Mr Coates and Mr Downie Stewart. , , , . Sir Austin Harris proceeded to give figures relating to the staple products of New Zealand—average export prices for butter, cheese, lamb, and wool for the years from 1929 to 1932. The value of New Zealand exports as a result of this drop in prices fell from £57,154,000 for the year ended March, 1929, to £34,496,000 for the year ended March, 1932, a decrease of £22,658,000, or 39.6 per cent., and the estimated value of total production from £125,300,000 for the year ended March, 1929, to £90,000,000 for the year ended March, 1932, a decrease of £35,300,000, or 28.1 per cent. Export figures were also given, and figures showing the amount of trade with Great Britain as compared with other countries. Public finances were dealt with. HEAVILY-TAXED COUNTRY.

"New Zealand, like ourselves," continued the chairman, "is heavily taxed. For the year ended March 31, 1929, Government taxation amounted to £17,832,000; for 1930 it was £19,471,000; and for 1931 £18,878,000. In 1931 there was a sharp decline in the amount of Customs duties owing to the falling off' of imports. The surcharge in income tax of 10 per cent, last year has been increased to 30 per cent., and the method of calculating income tax of individuals altered.so as to produce a further £730,000. The Government has also levied a tax of 10 per cent, by way of stamp duty on interest on Government and local bodies' loans. "On August 1 last the Government hxk

posed an unemployment relief tax of 3d in the £ on all salaries and wages and incomes received by males and all incomes of women exceeding £250. But' the serious increase in unemployinent compelled the Government to raise this unemployment relief tax to the very large amount,of Is in the £ as from May 1 this year'. The increase in the total of registered unemployed during; the last 12 months is, of course, a direct-consequence of, the world economic crisis, to which T have already referred and to which New Zealand is peculiarly sensitive. ■-,■ ■ " The net public debt at March 31, 1931, was £273,700,000, of which, say, one-third is made up of war debts. On this.debt, £154,500,000, or 56 per cent., was domiciled in London; £117,300;000, or 42.5 per cent.,, in New Zealand; and £4,175,000, or 1.5 per cent., in Australia. '. "No portion of the debt held'overseas, beyond Australia, matures until June, 1934, when the £,5,000,000 raised in June, 1931, falls due, and of the remaining £17,00.0,000 due in that year I understand the greater part iB held by State departments' in New Zealand. BANKING SITUATION.

"With regard to the banking position, the average figures for the March quarter of, this year for all banks show deposits, excluding Government £51,465,000, and advances £50,232,000, an excess of deposits of £1,233,000. Compared with the previous year deposits have increased by £212,000, and advances decreased by £4,100,000, which resulted in an increase of banking resources of £4,312,000. "Fixed deposits, at £34,466,000; constitute a record figure, and show an increase of £1,543,000, compared with the corresponding period of 1931, while call deposits, at £17,000,000, are the, lowest since 1916, and have fallen £1,331,000. "That which interests us particularly as bankers is the exchange question, and I propose as briefly as possible to review the circumstances which have led up to the present situation. "The selling rate for telegraphic transfers on London has remained ait £llO New Zealand for £IOO London since January, 1931. The corresponding Australian rate, which had stood at £l3O 10s Australia for £IOO London, was reduced to £125 10s in December last, and remains at that figure,.the buying rate New Zealand on Australia and the selling rate Australia on New Zealand being adjusted to £ll4 7s 6d Australia for £100; New Zealand." BALANCE SHEET.

Having spoken at some length on the exchange question, the chairman continued: ; " Our paid-up capital is unchanged at £2,000,000, and our reserve fund stands at the same figure. Note circulation shows a slight increase of £21,000, being £961,000, against £940,000 the preceding year. The average circulation for all the banks in New Zealand during the year was £5,800,000/ and they had the right of note issue up to £12,450,000. Deposit and current accounts are increased from £11,657,000 to £12,314,000 —a difference of £657,000. This is entirely in interest-bearing deposits. Bills payable and other liabilities are £l,oßl,ooo—a slight increase of £IB,OOO over last year's figure. "On the assets side of the balance sheet, coin and bullion and cash at bankers have increased by f 397,000 compared with March 31, 1931. Investments' are £2,612,000, and are again shown at market value. Last year this figure was £2,533,000. I might pust add, •as a matter, of interest, that we,have,decided to convert our War Loan into _a new Government security. You will observe a separate item, New,. Zealand Treasury bills, :£6SS2,OOO.".TKis- represents security-for the payments made: by us in London "on New Zealand. Government account, to;,which; J. have:; ajready, re-, "Biils receivable and bills discounted show a net decrease of £83,000 at, March 31, 1932, while advances on. securities and current accounts have decreased by £452,000, and now stand at £10,187,000; as compared with £10,639,000 a year ago. The percentage of advances to deposits is 83, about the average for the past 20 years, as compared with 91 per cent, in 1931. ;We haye most carefuUyrrevjwed these'.and we are. of the .opinion; that full provision;', has .been; made, for .'those account's; whiclraip; considered- tmdV'W dwibtWi;': Landed', property,: -pienuses,,;

and furniture at March 81 ; were £641,000; and show a small reduction- of £12,000 on- the preceding year.- -Outside the rebuilding at Napier and"HasthiKS, our .'expenditure in. the! near, future, ihottld. be small and 'will be kept dowri : to a minimran.. ■ t-)~ :^ ■•':•..■■ '..■"■'•. -'"!■:•-■ ■:'■«'''' "Taking the balance, sheet.m a whole, we. consider it represents a strong.-arid liquid, position. The ; -ratio of liquid assets to demand liabilities. is ,31* 2d', in the £, or, including fixed deposits, ;11» in the £, or 55. per cent, .'•,.:-. .' PROFIT AND LOSS ACCOUNT."? ;; ';

"I now come to the profit and loss account. The gross profit, after providing for bad and doubtful debts, is £600,300, a decrease .of- nearly .£46,000, or 7.1 per cent., as compared with, last 'year; /and the decrease in our net profits is £30,500,or 14.4 .■ per- cent.> the . amount f'being£l77,Boo, as against £208,300: at-March 31, 1931. You will notice that, our gross I profit includes; £41*600, profit on sale of gold, which we may call an extraneousprofit; we, therefore, considered it 1 desirable to distinguish it from'our ordinai-y' trading profit. You will observe, too that investment depreciation, is -fully pro-, vided for out of a special reserve ■ already set aside, for thai .purpose. "Overhead charges! are';"' down ..by £15,000. Expenses In salaries and;;staff; emoluments have been reduced "to a minimum. I greatly regret this, necessity, a? many, of our senior officers have been working under the most' exacting condi: tions and special cases deserving 'of recognition have been passed over. It is" not the fault of your officers and your'' directors that larger profits are not available. We consider it prudent, in view; of the difficulties and the uncertainties of the immediate future, to transfer £50,000 to a special exchange and contingency account, and we have not felt' justified in recommending a higher dividend than that now proposed. ■ In view of all the circumstances which I have placed before you I feel sure that oar proprietors will not look upon : the .return ofi: 6 per cent., free of tax, an being other than satisfactory: in these times.— ("Hear, hear") - • ..•--.' ..-' '.-■;■ ■■■■:■;■■ ' POSITION: OF FARMERS.

"You will gather from jfh'at.'l have briefly told you that the lot of the farmer : and primary producer in New Zealand is. to-day an unhappy one. Hampered in many-cases by the heavy burdens incidental to the purchase of their farms—" bought in. many cases during the ,land boom—and by heavy taxation, apart alto-; gether from the almost. ruinously low prices obtainable for their produce,, they have suffered and are still, suffering severely, and it is our desire to do, all that we as prudent bankers reasonably, can do to help them through their, present distress by. exercising patience Jttjd consideration. I may mention here that, under the National Expenditure, Adjustment Bill,. & reduction 0f.20 per. cent, in interest on mortgages will, give "the primary. producers considerable relieft;. , "I am sorry I. have not'been ableto> present a brighter picture: to.'ryou,; ■ nor can. I attempt to, forecast the duration of the. present .deep depression, ;bui.v as sure, as we are sitting here New 1 Zealand; is going to emerge from this depression, to a fresh era of prosperity, and, meantime, in view of the complexity, and .difficulties of the situation,. we. conceive it to be 'our, duty as custodians "of your interests to maintain in these times, the strength and liquidity" of the resources of the bank." ...< ~-, . ~,;'-.'.'■•. 6 PER CENT. DIVIDEND. After paying a,: tribute to the officers.: and staff of the bank, the chairman proposed—" That the" report' 'and: 'a'ccßti'nts"'be" adopted and entered on the minutes; that a dividend at. the,rate of 6 per cent 'per ; annum :for. the' months ended March "31 last beinotoV'deelared,/free of ihcbmertaxV and 1 thalteihe balance,of profit arid lobs' account,; '■l6s, to be cirried forward.". _ : Mr , Lv >M. Myersavapp.Mnteent<'la« 'director was'ratified, arid -Viscount Hampden and'Mr water, retiring directors, were. jjgefia&sMK; Mr Norman Dalston,'.M.B,E., proposing •a cordial vote of 'thanks tp; the,, chairman, directors, and staff, paid attribute .V to the services rendered by the late ; Son. William' Pember Reeves to the Dominion of New Zealand and,also Jfcp.the-bank. , This.was seconded by;: v Dr;G. gatt and accorded, .< and* A brief acknowledgment- by th'e \ch#itinan concluded-the proceedings.