BANK OF NEW ZEALAND

Otago Daily Times, Issue 21988, 24 June 1933, Page 5

BANK OF NEW ZEALAND

ANNUAL MEETING OF SHAREHOLDERS REFLEX OF PRESENT CONDITIONS The annual meeting of shareholders in the Bank of New Zealand was held in Wellington yesterday. Mr R. W. Gibbs, chairman of directors, presided over a good attendance, which included Sir Harold Beauchamp, Sir George Elliot, Messrs 0. Nicholson, W. Watson, and R. A. Anderson (directors), Sir Henry Buckleton (general manager), and Mr A. L. Hompton (chief auditor). CHAIRMAN’S ADDRESS

Referring to the principal items in the balance sheet, the chairman stated that tlie weekly average of the note circulation for the year was £3,650,438. The had increased by £1,007,396, the greater portion being fixed deposits, and it was probable that this expansion could be attributed to the lack of satisfactory openings for safe and profitable investment. Although an increase of £7247 was shown in the profit and loss account, that was not due to the ordinary banking operations, but to advantageous realisations of some overseas investments and certain other items of an arid non-recurring nature. The result of the bank’s ordinary operations showed a reduction on the past two years, as might be expected. For the past four years the profits of the bank had been ns follows:—1930, £948,534; 1931, £845.813; 1932, £587,023; 1933, £594,270. These figures conclusively proved that the bank was making no undue profits, but in common with most institutions, was suffering its full share of the burden of depression. The payment to the Government by way of dividend for the year was £242,708, and by way of taxes £408,250—a total of £650,958. Continuing, the chairman said it would be observed that the more readily realisable assets totalled £25,712,571, indicating that they were maintaining an exceptionally strong position, which, 'world conditions at the present time made imperative. The bank’s holdings of Government and municipal securities stood in the books at well under market value. Advances and bills discounted showed a reduction of £573,452. Ordinary advances were less by £2,274,798, but an advance of £1,575,000 had been made to the New Zealand Government against its discharged soldiers’ settlement mortgages. Some minor items made up the difference. No really safe and desirable advance business had been refused, but there had been a lack of demand for advances of that nature. -

Falling profits, Mr Gibbs proceeded, had nOt been followed by a commensurate reduction in rates and taxes, but some relief had recently been afforded to the banks in respect of income tax, inasmuch as in the assessment of taxable income they were to be permitted to deduct the amount of the bad debts sustained during the year. That concession w r as still a loqg way from the advantage to be gained were the banks taxed as ordinary joint stock companies. Interest rates had been 'reduced on two occasions during the year in order to conform with the general policy of the Government in bringing about a general reduction of interest charges. It was a matter of regret that the times did not permit of a continuance of the recent rate of dividend, but he thought that, taking all things into account, a final distribution of 5 per cent., making 11| per cent, for the year, would be considered satisfactory. After paying a tribute to the staff, the chairman wept on to discuss various financial and economic problems of the day. His references to these subjects will be found elsewhere in this issue. DOMINION CONDITIONS Sir George Elliot, seconding the motion, made a few remarks concerning the balance of trade, which are reported in another column, and then passed on to discuss prevailing conditions in the Dominion. “The chairman has referred to the lessened profits earned by the bank on its purely banking business for the year ended March last,” said Sir .George, “ and I should like to remind you that it has been mentioned at several of our recent annual meetings that such a contingency was likely to occur. The business of banking is just as sensitive to dull times as any other trade or profession; it is therefore the essence of careful management to make provision in good times for losses that sooner or later must take place when the pendulum swings from good times to bad times. That the pendulum has so swung is evidenced by the balance sheet we are now considering. “ But the times are in flux. We are passing through a period of depression in many respects differing from any hitherto experienced, and it is difficult to see what the end will be. The enormous burden of public debt that practically evei-y nation is carrying is as sand in the wheels of progress; One thing, I think, can be looked upon as certain, ancLthat i S) until a complete cancellation of war debts and reparations is definitely agreed upon, no lasting recovery in world trade can take place. “ It is not much consolation for us in New Zealand to know that we are in the same plight as the rest of the world,” proceeded Sir George, “that others are experiencing the aftermath of lavish borrowing and prodigal spending. Unwittingly, we and they have sown the wind and are now reaping the whirlwind. Taxation is nearing its limit; any increase may have a diastrous effect on the public purse. To* attain a balanced Budget there remains the unpleasant duty of cutting down public expenditure. Our particular trouble has been, and perhaps still is, that we have not sufficiently realised that New Zealand is a small country with a relatively tiny population, and we have followed in the footsteps of larger and more populous countries in setting up departments of State that arc in our circumstances unjustifiable. Several of such departments brought into being during the past 20 years might well be amalgamated, and others abolished, notwithstanding the good work they are doing, simply because we cannot afford the cost, nor does the present population warrant their retention. “ No pleasant dreams of the visionary of fanciful forms of currency, of inflation, or reflation,” Sir George concluded, “ will lead New Zealand or any other country into the Utopia so glibly promised by theoretical exponents. The present British banking and currency systems may not bo perfect, but they have been gradually evolved by succeeding generations of practical men to meet the intricacies of trade and finance, ancj they have undoubtedly had their part in the making of London the financial centre of the world. Until in the cycle of events good times come again, let us follow the high road of oldestablished methods, never forgetting the value of hard work and of living within our means.” VOTES OF THANKS Mr A. E. Mabin, moving a hearty vote of thanks to the directors, general manager and staff, said this was the fourth year in succession in which the working of the institution called forth the full exercise of the intellect and ability of everyone connected with the bank. If the previous years were anxious, this last one had provided move trials than ever, but the institution had emerged from the storm intact and unharmed, and the shareholders and the general public bad complete confidence in it as the principal financial corporation in the Dominion. The shareholders had to accept a lower dividend. it was true, but it could not bp too strongly emphasised that, taking into consideration the shareholders’ funds issued by the bank, consisting of subscribed capital, published reserves, and undisclosed reserves, which it was recognised any sound bank must to keep a strong position, it was questioni able whether the shareholders would get 1 over 5 per cent, on the moneys. He recalled that in the last session of Parliament, the question of the company paying 10 pOr cent, was referred to in the House, but the irony of the matter was that the company paid a considerable proportion of the dividend out of investments in Government stocks taken out when the Government was urgently requiring money. The bank had been able to continue a satisfactory rate of dividend despite bad times, owing to the conservative policy of the board in the past in building up a strong carry-over, which in 1931 was £025,000, but which now had been reduced to £344.795. He said they were all glad j to see Sir Henry Buckleton in his seat I that day, They sympathised with him in liis recent illness, and the shareholders would wish him many years of good

health, usefulness, and would hope for continuance of that devotion to the bank’s interests and welfare which had been his guiding star through life. He also congratulated Mr Gibbs on hisn appointment, as being a chairman who would stand firmly for correct principles in banking and finance. Mr F. Burton Mabin endorsed what had been said about Mr Gibbs. He added that it seemed to him that a tremendous lot of " bunk ” was being broadcast in connection • with the banking system, and the particular institution of which they were so proud. He thought it was about time the directors took their gloves off. Perhaps they might consider the desirability of doing a little more propaganda in future to enlighten the public on what “our grand old institution stands for.” The motion of thanks was seconded by Mr D. A. Ewen, who said that the policy pursued by the bank in New Zealand had been conservative and wise. He congratulated the chairman on his very able exposition of the present situation. t Mr L. M'Kenzie congratulated the bank and thanked it for the able assistance it had given to the smaller traders. He said he felt that the present was not- a time for experiments; it was a time when the Government should leave banking alone. He sincerely hoped the Government not unduly interfere, because it might find itself in the position of carrying the burden which the bank was now assisting to carry and which would fall heavily on the Government’s shoulders. The chairman returned thanks for the expressions of confidence made by the various speakers. Sir Henry Buckleton replied on behalf of the staff, which during the past year, he said, had had a very trying time, especially the branch managers.