BANK OF NEW ZEALAND.

Otago Witness, Issue 2527, 20 August 1902, Page 27

BANK OF NEW ZEALAND.

THE ANNUAL MEETING.

DECLARATION OF A DIVIDEND.

(Fm Vhitbo Press Association.)

WELLINGTON, August 1

The ordinary general meeting of the proprietors of the Bank of New Zealand was Leld at the head office of the bank to-day. Mr F. de C. Malet, Chairman of Directors, presided. The report of the directors stated : JThe Directors rubmit herewith the Balance Sheet and Profit and Loss ytptemout of ihe Bank for the year ended 31st March last. Tlie profits, after providing for expenses of management, including a donation to the Provident Fund (£1650), and for all bad and doubtful debts in the Bank's current business are: £-289,501 11 9 Fiom this has been deducted interest on £2,000,000 guaranteed stock .. - 80,000 0 0 £209,501 11 9 iDt this sum the directors have £37,000 lls 9d as fol- ; lows: — 3Tur.ih.eT provision £03? Bank ot New Zealand Estates Company " Assets in liquidation '_' . . £22,000 0 0 In reduction "of Colonial Bank property and premises account . . . . £5000 0 0 Jn reduction of Bank of ■ New Zealand property, premises, and furniture, I £10,000 11 9 ' 37,000 11 9 Leaving a balance in profit and loss of £172,501 0 0 This the director! propose should ' ' be disposed of as follows: — j Statutory payment 1o Assets : Realisation Board . . . . 50.000 0 9 JMvidend at the rate of 5 per cent, for the year ended 31st I t March on the share capital (£427,319 17s) ". 21,365 0 0 JLft&vmg a surplus to be paid over to the Assets Realisation Board in terms of the " Bank of Kew Zealand aud £ankir.g Act, 1895," clause 11 „ .. 101,135 0 0 £172,501 0 0 ' During the year a branch has bpen opened tftt Waihi and an agency at Te Kuiti. The agency at the Clyde has been made si daily j branch, and the branch at Wairoa. Hawke'a j Eay, which many years ago was closed, has Leer re-opened. ' P. de C. Malet, Chaiiman. BALANCE SHEET At 31st March, 1002. Liabilities. CapitalFour per; cent, guaranteed stock .' £2,000,000 0 0 Ordinary capital up under " The Bank of New Zealand and Banking Act, 1895" 500,000 0 0 Amount paid to date . . . . 427,319 17 0 ! Call of 1895 made in terms of " The Bank of New Zealand and Banking Act, 1695, ' £3 Gs 8d per share . . 500,000 0 0 Amount collected to date and j specially applied as provided by the said act . . . . 435,022 11 4 Nominal reserve liability on j shares 437,063 6 0 I'refarred share capital issued to tho Cro - vn, and repurchased in terms of " The Bank of New Zealand and Banking Act, 1895," section 8, and available {ot reissue in terms of section 13 of the said act .. .. 500,000 0 0 !Re6erve fund invested in Xew j Zealand consols 23,474 7 4t4 t 2?otes in circulation . .. 759,464 0 0 Bills payable in circulation ■. 585,067 2 7, Deposits • 10,016,638 11 2 Cther liabilities .. .. 114,547 13 6 Balance of profit and lots .. 172,501 0 0 i £14,099,012 11 7 ABSETS. Coin and cash balances at bankers .. £1,375,918 15 4 Bullion on hand and in transit 112143 14 9 Money ot call and short notice, bills receivable, Government securities and other securities in London 3,603,070 IS 1 Investments in the colonies — Colonial Goverranent securities 578,131 5 0 Assets Realisation Board debentures .. .. .. .. 1,600.000 0 Q Ifuntcipal securities .., .. 21,053 6 1 Other securities .„ .. .. 2«,500 0 0 Bills discounted 1,«95,147 11 7 Other advances and securities and debts due to the bank . 4,441,986 7 4 Landed property, premises, eto 356,628 8 9 ißank of New Zealsnd Estates Company (Limited) " Assets in Liquidation " (book value) 252,251 10 2 Colonial Bank property and premises „.."..*., .. 30,277 14 6 ±14,099,012 11 7 Profit and Loss. ffet balance of profits at 31st March, 1901, paid to the Assets Realisation Board in terme of " The Bank of New Zealand and Banking Act, 1695," eection 2 £ 50,000 0 0 . Twelve months' 'nterest on I guaranteed stock . . . . 80,000 0 0 Amount written off " Bank of Jv T ew Zealand Ectates Company (Limited), Assets m Liquidation " 22,000 0 0 iAmount written off bank property and premises .. .. 8,493 13 1 Amount written off Colonial -.Bank property and premises 5,030 0 0 Amount written off furniture " mccount ~ 1,506 IS B f^jtlttice for year ended 31st "Harch, 1902 „ .T. T .+ «, 172,501 0 0 | £339,501 11 9 JE^:*rce from rear ended 31st March, 1901 £50,609 0 0 Profits for year ended 31&fc March, 1902, including recoveries, and after pay- ' dai si and fizoniuta tm

all interest <3ue and accrued on deposits and provision for bad and doubtful debt 3 in current business .. .. 459,557 4 2 £609,557 4. 2 Less — Salaries and allowances at head office and 124 branches and agencies 107,076 19 6 Directors' remuneration, including London Board . 3,100 0 0 Genera! expensss, including rent, stationery, travelling, repairs to premises, etc 29.937 17 2 Audit expenses account 2,418 4 7 , Rates, taxes te^gTims, ami J postages 27,522 11 2 i £339.501 11 9 Resshve Fund. Balance - £-23,474 7 4 Balance from year ended 31st March, 1901 £23,474 7 4 In moving the adoption of the report and 'balance sheet, the Chairman said: — Upon comparing the figures of this balance sheet submitted to you this year with those of 12 months *go, steady progress in the development of business will be noticed. There is nothing abnormal. We have done nothing to foster anything but legitimate expansion. Taking the various, it*>ms separately, the first coming under notice as showing any material va-iiation is under the head of bills payable, a reduction in liability of half a million, which, however, is of no significance, and represents fewer Government remittances in transit at the time the balance theet was prepared. Deposits show a niate1 rial increase. If, howovor, any of you have followed the New Zealand quarterly a\erage btatementd, you will have seen that at March, 1902, Government moneys held in the colony account for a largo proportion of this increase. I make this explanation as it must not be supposed that the increase cf upwards of a million in deposits is permanent, a very large proportion of it represents exceptional lodgments which may disappear from next year's balance sheet. Coin, bullion, and money available at short call show an increase of an amount about equivalent to the increase in deposits. Certain investments have been paid off in the colony showing a reduction of £281,000. Bills discounted, including bills receivable, exhibit a reduction, but when we compare the difference in the advances, against wool as between March, 1901, and 1902, it will be readily seen that bills drawn against this class of produce mupt necessarily tend to a reduction in the aggregate. Advances show a steady increase, and are higher by some £330,000. Were xv& less particular in our selection of advances, we, of course, could have shown a still greater volume of business. We beltevo, however, that the in- , crease- represents good sound busine-ss carefully chosen from the various applications submitted. Profits: You will notice that the net available profits for this year are £209,501, as against £210.665 for the previous year, thus showing an apparent shrinkage of £1164-. I think it right, however, to say that the actual profit earned on the current banking business really exceeds that of last year by about £15,000. During the previous year we wer& fortunate in making certain recoveries, which, under the deed of settlement, must pa=s to the credit of profit and loss account. Consequently some explanation Lg necessary when comparison is beinpr made bi-tween the figures of the actual bnnking businss^ of one year with another. Landed property and premies are lower by sonip £32,000. During the year we have received payment for saY of piopert> in Sydney, Adelaide, n'ld certain email place? in Ne-w Zealand, where properly was held which was not likely to be Tcquircd for banking purposes We have also written off our bcokfe priMjuse? v, hich it has bec-n necessary to replace. Of course, old wooden buildings will not last for ever, and rebuilding of old premises and renovating and altering others must necessarily mean a considerable annual outlay. Assets in liquidation have her-n reduced during the 12 months by £24,000, and although we intimated liiet year that further provision was unlikely, we think it advisable to put aside a sum under this head. By «> tJointj we .shall be on the c afe side, and should realisation turn out better than anticipated, any such amount will, if course, be set free. I woulcl here ask you to obser»e thtt the account '"APuots in liquidation," which in the balanro sheet of 1399 stood at £<55.000. has at the present time been reduced to £252,000. We have also received from the Assets Realisation Board in repurchase of their debentures the sum of £330.285, and since closing the books a further £75,000. And here it may be interesting to summarise what has been done towards strengthening the bank's position since 1895. After meeting- all expenses we have, out of profits, paid to the Assets Realisation Board the statutory payments of £50,000 per annum, amounting to £350,000 Assets Replication Board, additional payment, 1902, being balance of profit . . .... 101,135 In reduction of the afi^etn in liquidation . . • 139,933 In effacing from the balance sheet the debenture convr«ion account 68,445 Wiping out Colonial Bank goodwill account . . 75,000 In reduction of Colonial Bank property and premise* . . . 15,000 In reduction of our own property, premises, and furniture ... ... 51,505

A grand total of ... ... ... £600,873 — which is a good indication of what the bank will be capable of doing now tliat it has practically a clean 6late, with the exception of the Assets Realisation Board liability, and which also shows that those who gave evidence before the Pailiamentary Committees as to the large future earning power of the bank were well within the mark. Before leaving this table I would draw your attention to the fact that this year we have been in a position besides making the statutory payment of £50,000 to the Assets Realisation Board to make a further payment of £101,135 to that body towards providing for any deficiency that may arise on the sale of properties vested in that board. Reference is mado in th© directors' report to a proposed annual contribution to the Bank of New Zealand Officers' Guarantee and Provident Association. It is many years since this association's name apeared in our reports, and it ia only right that shareholders should have come knowledge of an institution within the bank which exists for the mutual advantage of both the bank and the staff. I cay for the •gjmiiial %flrfcniazfi of the pfjtk aiuUhft fta£L

inasmuch as the association provides a means for placing on pension officers with whom, •without the association's assistance, the bank would have some difficulty in dealing when they arrived at an age when their labours are no longer of full value to the institution. At such period the rules of the Provident Fund provide that on a scale, governed by the average salary they have drawn, they receive a pension, subject to variation at the quinquennial investigation of the funds, the minimum pension being £100 and the n aximum £350. The association has recently been incorporated by act of Parliament, and its affairs are managed by an elective Board of Management from among the ftaff with a representative thereon from your Board of Director*, and with the general manager as one of the board ex officio. A recent actuarial in\estigation shows that the association must receive some small assistance from the bank if it is to be kept upon a sound and safe baFis. Shareholders, perhaps-, may have noticed that a donation to superannuation or provident funds in connection with their various staffs now appears in the accounts of most banks both at Home and in the colonies, and in giving a small annual donation of li per cent, on the salaries of officers we are satisfied that the bank ia following" a prudent course and one which in tlie long run is of undoubted advantage to the bank. I may toll-j-qu that tlie association is> now a concern of ebme iragnitude, and has a capital upon- which to pay pension* amounting to close upon £150,000. EXISTING LEfcISLATIOX. I am avraa - e misapprehension exists as to some, of th« provisions of the statutes affecting the bank enacted by the Legislature iv tlie year 1894 when the colony came to its assistance, and since that date to 1£93, wheu the most recent statute was- passed. I do not think it would be out of place on the present occasion in view of the surrounding circumstances — the declaration by the directors of a duidend, and the fact that the guarantee (£2,000.000) of the State expires in 1904, and for other reason? — if I referred very shortly to some of the leading enact-nit-nts of those statutes. " The Bank of Nev Zealand Share Guarantee Act, 1594," passed on the 30th June of that year, authorised the directors to increase the capital by the issue ot shares to au amount not exceeding two million pounds sterling in shaves of £10 each upon which there shall be no liability. The shares so created had a preference over all ordinary phares, were guaranteed by the colony, and had a currency of 10 years- from their issue, until 1904, and bore a rate of interest not exceeding 4 p°r cent, per annum. It is unnecessary to i#fer to the provisions of the amendment act of x July of the same year beyond stating that under this act the guaranteed ©hares (£2,000,000) were isued in the. form of debenture stock. "The Bank of New Zealand and Banking Act, 1895," empowered the- directors to rai»e new capital to the amount of £500,000 by tho issue of preferred sharps to rank next after the , guaranteed shares and in priority of all other shares, and bearing a rate of interest of £3 lOj per centum per annum. These shares to , be issued to the Government of the colony | in exchange for Government debentures or j securities. Power was given to the bank to re-purchase those shares and to reissue them on certain conditions in the first instance to shareholders and then to tho public. The shareholders under " The New Zealand Bank Act, 1861," were liable to certain events for a further sum of £10 per share, and pro. \ ision was made in this act that (1) the proceeds of th^ first call of £3 6a 8d per share, estimated to yield fi'-SO.OOO, was to be applied to writing off and to eeaso to I c dividend or interest bearing, and to be deemed to lie cancelled. (2) The proceeds of tliß second call of £3 6s Cd per el-are wes to provide additional capital of the bank, and to bo deemed a fully paid up phare of j £3 6s Btl in the capital of the bank. (3) ' The balance of tlie reserve liability of £10 j l£6 b-> 3d per s] lar c) i«. tinder certain circumstances, to be called up by tho directors of i tlit bank upon the requisition of the Colonial Treasurer, and to be paid to the AssetH Board to be applied in the redemption of the de- , ben tnrcs issued by the Assets Board, but j \he call can be made for t 'vis purpose only, j Kffect has been given to the above clauses j numbered 1 and 2. The pro\ inons of see- J tion 11 of the act fTin as follows: — "So; long as any liability on the part . of the colony phall continue to J Bubsitt under this act, the balance of the net profits of the bank for the year ending on the 31sfc flay of March, 1896, and for osnh subsequent year ending on the 31st day of March, fchall, after pio\iding for the amount of dividends payable in each such year on the guaranteed bhares and preferred shares respectively, be applied in manner following, that is to Ray: In the first place, in payment of a fixed cumulative sum of £50,000 per annum, which shall be transferred and paid to the Assets Board ; iv tlie n«xt place, in paymeut to the proprietors of the ordinal shares, who shall have r>ai<l all instalments then due of the call directed to be made by section 9 hereof, of a dhi- , dend not e>.eeeding £5 per centum per annum on the amounts for the- time being paid up by them in respect of moii rail ; and the residue, if any, of surli 1-alaiicc bhall be paid to ihe Assots Board."' Subsequent sections of tho same statute enact that the Estates Company shall bell to tlie Asset, Boaid as on the 31-t March, 1895. ' certain assets of the Estate? Company and of the Auckland Agricultural Company (Limited), both of which fell into the hands of the bank as mortgagees. The price to be paid was £2,731,706, and the purchase money was to be provided by the creation of debentures of a corresponding nominal amount with a currency of nine years bearing interest at £3 10s per cent, per annum from the 31st March, 1895. Provision is made for the redemption of the debentures, inter alia, by the sale of the properties, the payment by the bank -of £50,000 p«r annum, and all the net profits of the bank, after providing lor the sum of £50,000 annually, and for the dividend to the share- ; holders not exceeding 5 per cent, per an . num. on the ordinary bhares, and all the bankS reserve fund created after the pa^p ing of the act. Subsequent f-ections of lh° act provide machinery for the carrying out oft the objects of the As?ete Bcmrd. Other sections of the act make prov'sion for the Bank of New Zealand subject to the ap j pro%al of Parliament to purchase the busi- ' ness and assets of any other bank carrying on business in the colony. Under the authority provided by the statute in October, 1895, the Bank of New Zealand purchased the business of the Colonial Bank of New Zealand, and tho contract was subsequently approved by Parliament under certain conditions. In a later session of Parliament a committee of the House of Representatives was appointed to make certai*_4ttouic|ep rafie&ifig tfe« Bwik, oi Nejt

3 Zealand and matters connected therewith. , In October, 1896, the committee presented : its report, and in October, 1898, an act was i passed, the main provisions of which are : i That as from the 31st December of that ■ year the Board of directors was to consist of six persons, four to be appointed by I the Governor-in-Council and two to be elected by the shareholders, all of whom ; hold office for two years, and were to enter , upon their duties from the last-mentioned * date. The office of president created by the previous acts was abolished, and proision was made for the appointment by the Board of Directors of one of their num- : ber as chairman, who holds office for one i year. That is shortly the- position of "matters at the present time. The guaranteed debentures, representing £2,000,000, and the , Biim of £427,319 17s paid to Slst March last out of £500,000 called up from the ; shareholders under the act of 1895, form together the capital of the bank ; th« preferred share capital of £500,000 issued to the Crown having been repurchased by the bank in October, 1900, in terras of the provisions of the same statute. I will touch later on on tho accounts of the Assets Idealisation, Board. dividend. • Now I come to what must lie regarded as a" new departure in the more recsnt. court© of the bank's existence, and it demands from mo special comment. Jn recommending the payment of a dividend, the board is fully 1 aware that it has to run the gauntlet of tlie critics. Criticism is useful, and so long as it k \vcll directed arid based, on a full knowledge of circumstances it cannot but have a beneficial effect on the movements of public institutions. But it is on this question of knowledge that the full value of criticism hinge*. Circumstances must govern cases, and in dealing with a matter of policy the authorities of ifce bank, possessing as they do a clear perception of the position, should be considered competent to judge accurately as to the course to be pursued. Point will be given to this when I emphasise the fact that the directors and officers of the bank have no ale to grind, no personal interests to serve. They have but one desire, one object in view, and that is to do what in their judgment will most surely conduce to the welfare of the , bank and to the discharge of its obliga- . tions to tho country. Having in view defici1 encies likely to arise on realisation of properties under the control of the Assets . Realisation Board, and for which tho bank is responsible, the question may very rightly be put : Is it prudent to declare a dividend while there are unascer- : tamed liabilities to be adjusted? That is a question that can only be answered in the light of surrounding circumstances. Let me * therefore again direct your attention to wh»f ■ •the bank has already done in the way of • meeting 1 obligations and clearing its way ; i generally. A» to direct indebtedness to the > oountry it has naid off half a million (£500,000) by repurchase of preferred Bharcs, to which I have already alluded, and this, iby the way, not by the aid of deposits or , hy any restriction of business, but principally by proceeds of wholly unproductive assets realised as opportunity offered, and I cannot conceive of any object to which the money so obtained could have been j so properly devoted as to the pay- j ment of a part of our debt to , the State. Then we have purged our 'balance sheet of absolutely everything in , the shape cf paper assets, no trading con- J corns now remain on our hands, and every ■statutory obligation has been met ; there is not an item of a bad or doubtful nature in current business which ha 3 not been fully piowdcd for. and here I wish you to bear in mind that with such a laigc connection Me cannot escape contingencies of this 1 rharar-ter. Liberal allowance has been made j for such items as bank premises, furniture, ' otc , a-> a reference to the balance sheet will . J show, and when I *ay after all these pro- i visions we further find ourselves in a posil tion to practically wipp out all ascertained \ deficiencied in Assets Board realisations to date, it »-eem< to nif we have fully conformed to the intention of Parliament as expressed i in section 11 an'l 'üb-s-ot-tion 5 of section 26 jof the act of 1895 It may be argued that j this is all lery well so far as it goes, but -what 39 to such deficiencies which in al'. I probability are bound to arise, on future realisations of Assets Board properties'' My | r/>ply i«. On tliat prore there need he very little apprehension, for the increased earn•inflf power of the bank i* now on such a .sohfl ba-u that the surplus profits are likely to provide for all deficiencies. As to the liquid npsrts of iho bank, th«>y alone are •sufficient to meet any eiM-h call without disturbing the ordinary business. That. then, j is the position, and while the facts I have placed before you afford of theinselyes- justification for rreommemliug the distribution of the comparatively <-mall sum (£21,366) in■voKed in the- payment of dividend there i» something vet to b*> ?aid m support of it. In thi course of the very severe ordeal through which the shareholders of the bank had to pass, it hapened unfortunately that ' many had to succumb, and their holdings became forfeitod to the bank. With no pro^p^ct of a return these shares were valueless: now we may look forward without affwtiu<j tho property of present holders, but hy a judicious compliance with the law of demand, to rp«ton> these shares to the I register, and by reviving tlie reserve liabihtv on them, to larjrelv increase the security of the country. Further it should be borne in mind that it is chiefly by the creation of a healthy and well-grounded public interest in the bank that we can hope to relieve the country of that liability which was s>o i>e«f>ronsly undertaken in a time of peril. In concluding my ufeieiu-e to this, subject, 1 would juht .-ay that with our fine j connection, a business in prrfeit order, and • •with the policy we have drcided to fccnipulotuly follow, of pio\io.n- fur every contni!?emy as we <?o. thus beginning tach year , with a perfectly cleati sheet, we are quire, satisfied to ar<ept the ie«pons»bility of tle<idmg that the po-ition is fiifh a, to war- > rant u^ in giving effect to the statute and ' making some return and affording some encouragement not only to those who have thiough no fault of their own differed ? o severely in the paat, but als-o to those who have subsequently shown their confidence m the future of tlie institution by assuming the responsibilities of proprietors. ! GOVERNMENT fJPAIMNTEE. ' Having bhown you, and I hope clearly, what i the position of "the bank is iv relation to the piobable. deficit on reahsaiion of properties under the control of the Aspels Realisation Board, it occurs to me that very naturally there may be suggested to your minds the question: But what about the guaranteed slock lbsued to the bank, and how does the country stand in regard to that liability? Un that point I can only pay that, when through the medium of that guarantee new capital was found, the ba.uk, ovying to gene-

ral financial unrest, and the then unsatisfactory condition of its affairs, was fast . losing what is a very important part of the bank's trading capital — viz., that derived from the public by way of deposit. Pro* vious to the issue of the guaranteed stock the bank held British deposits to the extent of between two ai.d a-half and three millions, and it will interest you to know that the whole of that sum has been repaid. Much of it would have been retained when jratters calmed down, but the policy has been" not only to decline new money offered in London iv this way, but e\en to refusa to renew deposits as they matured — the experience being that those deposits were not so much to be Telied -upon as local money. The position then is this : that the Government, as guarantors of tiie £2,C00,G00 stock, stand iv point of security in exacily the same relation as the discharged depositors did : they have the whole of the assets ol the bank to fall back upon, but with this important difference, that those assets are to day of far greater value ; they have passed through ;v course of ' purification, and are now, I am pleased to say, absolutely clean, while as to their productiveness the statement of profit and loss now laid before you is the best evidence, and establishes tha I fact that the goodwill of a business in such 1 a condition as I have described and furnishing such satisfactory results is of itelf no u)ean security as against the guarantee. ASSETS REALISATfON BCfAHD. The position of the bank would not be fully befoie you" did" I not refer to the relations that .exist between the. bank and this board. As I hay« already mentioned under tha heading of " Existing Legislation," the prie« to be paid by the board to the bank for properties which passed to their control for realisation was £2.731,706. Subsequently this amount was reduced by adjustment of accounts to £2,630,285, for which sum de- '■ bentures were issued by tlie board to tba bank, and represents the book value of the properties now iv question The following particulars show to date the sales by th« board : — ; Entire estates sold £403,939 Estates of which only portions have bee» sold &16.027 £324,966 Cash received on account of same £5*3,480 Owing by purchasers « 281,466 — : £824,968 In addition to the proceeds of properties, ag shown above, the Assets Realisation Board will have received from the bank £451,135 ' wben the amounts shown in the report now before you have been handed to them. This sum represent? the statutory payment of £5G,000 per annum for seven yearsj £350,00 C : and £101,135 being the surplus profits foi ! this year. After payment by the Asseti | Realisation Board of the interest to date on their debentures and the expenses of management, a sum of £405,265 has been applied in the redemption of their debentures, and a further ram of £125,000 will now be. available for the same purpose >x making the total value of debenture" '•adeemed £530,285. leaving a balance of debentures outstanding o f £2,150,000. The general manager of the Assets Realisation Board, in" his evidence before the Banking Committee eet up by Parliament, estimated the deficiency upc-a the sale of the properties atf £841,261. lam pleased to tell you he has since formed the opinion that the ultimata deficiency in realisation will be considerably less than the above estimate. THK BOARD. I might refer - shortly to the change that has taiien place in the personnel of tha ■board. The Hon. .Sir Jas. Prendergast was appointed to a seat on the directorate in tha month of March la^fc, in tho place of Me Blair, whose resignation had been accepted by the Government. Sir James Prendergast for years held the office of Attorney-general of the colony, and was subsequently raised to the Supreme Court Bench as Chief Justice. My co-directors and myself welcome the presence en tho board of so able and distinguihhed a colonist. A vacancy on the directorate of the London Board has been filled by the appointment of Mr Frederick Lubbock, a brother of Sir John Lnbbock, now Lord Avebury. Mr Lubbock is well known in financial circles in Lcndon. AUDIT DEPARTMENT. This department is so important a feature in the management of the bank that I feel no excuse is needed by me lor referring flhortly to it. In "The Bank of New Zealand Share Guarantee Act, 1894," provision is made for the appointment by the Governor, by Order-in-Couneil, of an expert banking business to act as auditor in respect of the business of the bank, in "whatever place it may conduct its, operations. Large powers are conferred upon the chief auditor, both by statute and under regulations defining the -duties and powerß of hi* office. It will thus be seen that with tho board of directors; general manager, aiid chief auditor the interests of the bank, th» shareholders, and tho colony, are, I venture to say, abundantly safeguarded. Tho chief auditor, Mr, Alexander Macintosh, ia an officer who has had a wide experience in banking, whose ability and valuable ser\ices to the institution are thoroughly appre. riated with myself, as chairman, by my coT leagues, and also by ihe general manager. His criticism of the conduct of the affair! of the bank we readily admit is of the gTPatest value to all concerned in the administration of the very large and varied business carried on by the Bank of New Zealand. I think it appropriate that I bhoulcl conclude my remarks by urging shareholders to loyally support the institution. We have undoubtedly done well during the past few years, but I am convinced 1 that if everyone interested in the bank gave it such support as is in their power to do, we should be able to show a very considerable improvement throughout in future balance sheete. It is not unreasonable to expect that shareholders should do their businec« with the bank in which they are so - largely interei-teo 1 I should feel 1 was wanting m my duty to the institution, and more especially to Mr Embling (the general manager) and the officers of tlie abnk, if I did not, on my own be-half and that of my colleagues, publicly express our appreciation of the services they have rendered to the bank. The general manager has been an officer of this bank for over 27 years, and previous to entering upon the duties of th« post he now holds, disehargeu those of a branch manager and an inspector in this service. The experience he lias gained ia. a long and honourable career in the employ of this bank as well as another has 'been and is now being utilised in the carrying ouo of the duties attaching to tlie important position of general manager, an experience which, in tlie hands of an able and conscientious officer, has contributed to bring about the condition of things that now obtains in the bank. As resrarda the staff.

1 am well sware that similar remarks are frequently made on such occasions as the present, and are no doubt satisfactory to .those concerned, but I desire to add that periodically we review the salaries of all officers, in the service, and endeavour to recognise merit in * more tangible msoner fthan is conveyed in a mere vote of thanks. 1 have endeavoured to place before you, as it presents itself to me, the position of matters surrounding the Bank of Kew Zea3and *t the present time. I may have covered too much grovnd, but I trust you ■will still consider that under all tfie cir cumstaiices the statement is not devoid of interest for you. I now move the adoption of the report and balacca sheet.

Mr Watson said: I rise tv second Ihe udoptibn of fie report and balance sheet, end ifi doing so will make a few remarks -on the general position and prospects of jthe bank, which doubtless are expected by the shareholders from one of their own representatives on the beard. In the first place I heartily congratulate both the liovernment and the shareholders on. ihs results so clearly set before you by the rh&innan, and, on behalf of myaelf and the others who in 1395 gave to the Parliamentary Committees a favourable estimate of Iha future earning- power of the bank, I, - thank " th© chairman for his kind mention regarding us. The eHiimaxes then gjvqn . bare beea largely ©xce«dedi but it v. ill ba jtvitnin. youn racoileetiou thai, when gjven, -, they were publieiy stated, by some persons of standing ia the colony to be unwarrantably excessive^ Our opinions, however, were based an- carefnl calculations, and from them we have neves- swerved. Some of thos? who held to the contrary have since purchased" fchares in the- bank, and that. I think, must be taken as the- beat evidence of their p'.iange of opinion. Now, probably, few, if my, can. be found who entertain the belief that th* action of tine Government was unwise in coming to the assistance of the .hank as it did, or that such action has Hroved anything but beneficial to the colony us well as to the shareholders. The preeent position ci the bank's business is, I jthink, as sound as that of any bank doing -business in the Southern Hemisphere. I have been present at the transaction of all important business during the past eight years, and speaking for mysalf and my Lolleagaes- I am satisfied that ample- provieion has been made for probable losses. the board, I must say without egotism that it performs its functions properly. Mi Jlalet, the chairman, discharges *he "duties of his ofBc& with ability, takes a Seep interest in the welfare of the bank, 'and is careful to bring before the Board everything necessary. Of course we are not always of one view on every question jbrought up. Were we so, our individuil attendance would be of little use ; but the resulta alter discussion are in the best interests of the bank, and I may say that tve work well together, and that our lengthy sittings are conducted harmoniously. The highest legal experience, as well a* exp&ri•ence af agricultural .pastoral, trading, manufacturing 1 , mercantile, and banking affairs are represented on the board — indeed, lome of U3 may even have had useful mining experience. I endorse what the chairman lias said regarding the fitness of Mr Emfcling, the general manager, the merit of Jthe staff of officers, and the usefulness of Jthe ' coie£ auditor, Mr Macintosh. [ have always given credit to the officers for having maintained the deposits and goodwill of the '^customers during the tiyi r yearn {prior to 1895, when reductions rather jthan increases of salaries were the rule. IWhat must be of the greatest interest to all concerned ia the topic of the future prospects of tlie bank, wrapped up a«s they «re with those of the Asset 3 Realisation JBoardv L may here mention that as regards the realisation of properties by 'Vit board, E have had opportunity from tine to time of becoming acquainted with the correct facts s& to matters criticised by outsiders, as well as ©f watching the general progress, and as a result I am of opinion that there* is no reason to throw any discredit on the iadminMCration. As the chairman has told you, tue bcok values of the assets entrusted po the board to realise amounted to £2,630,285. Of this £324.966 ha* practically been realised, and the balance 6hcet of the Assets Board shows that at the present j fcime the sum of £164,000 is available to reduce? the deficiency originally estimated at £8*l»G0O- by Mr Foster, general manager of that board. The bank's own balance sheet is qnite clean and free from 'deficiencies, so that if the estimates are Jcorrect, what we have to face- to-day i 3 roughly £677^000, the difference between hoot rallies and probable realisable values of thft properties remaining to the Asseta (Boai-d. "Now the yearly net profits of the foank the past two years have averaged (£210,000; and if that average be maintained m the future we should have, after deducting £2LOOG for dividends to shareholders, ro lea than £189,000 to go annually to the •Assets Board until the deficiency is provided for. The Assets Board, however, owing to their heavy interest charges, will lin futuro require a portion of the bank|s (contributions to balance their accounts ; it ii difficult to estimate hew much, as seaBore, prices, time necessary for realisation, and other factors enter into tho operation : pbut on tlie whole it is fair to assume that of the bsnk's profits do not suffer serious ViimicnKoa there will be about £100,000 Annually wherewith the Asset? Bc-.ird can reduce its deficiency. At that rate spven more years should see the bank practically free, atd I oak you to contemplate what ■the position and the value of your shares .will bo then? Instead of having £21.000 available for the yearly dividend, there ( would be something like £200.000, and this too if the bmincßS stood still for seven years instead of increasing, as it is likely to do. Of course all thid depends on a renewal cr partial renewal of the present orrr.nseme-nt ,with the Government, but in the circumstances such can hardly be doubted. Another phase of the matter is that, the goodivili of the bank being of such undoubted value, fr&sh capital may be raised against it to wipe off the Assets Board's deficit; at a much earlier period thaa -even years hence, and I for one would not hesitate* to i.«k my quota in -the in-, estmeut. ) taic rliis opportunity to itate that I intend again to seek re-election as a director in February next, and have now much pl'-n -urc •in se-c oil ding the motion for tho adoption of th& report and ba.la~cp si eel

Sir llartin Kennedy said the i 'uinum liad put the affair-, of tbe U3uk to clea~l> before the meatiug that n almost scorns. l like presumption on Ui«» part to attempt to offer any furtuar explai-u. i~u, but hating in view the face that they we.c addressing r.oL only the meeting of sliarciioiiifro, but the feople of the coTcny,-- ar.d in a scii=o the arHajiyr.^ aai luiM they had to «iutiuate

very severe criticism, he intended to make a fey/ remarks. Ho was actuated in doing •this more especially by the fact that the keynote of the criticism had already been eounded by the statement that it was injudicious to pay a dividend at this stage of the bank's progress. In the face of a statement of that ki<nd, no matter how <'I<?ar the ■balance sheet might be, or how clearly the position of affairs might be set forth, there would be a certain number of shareholders who would be writing to representatives, and especially shareholders' representatives, askdng qrrcsticn- in reference to matters connected with rho hank. For instance, these question-s might be asked : — (1) What program has been made in realisation of assets \ ested in the A=spts Realisation Board, and •when can h b" expected that the last of them 1 will be rpansed* (2) The probable da^e wheti the back < in do without the polony's .{guarantee. <?>) Tf Hip .remaining call of £3 & 8.-1 on the reserve liability is likely to be^ made before the aec expires in 1904? la reply to the fir^fc quc--ticn he would <=ay (fie a^soi* In-kon over by the Assets Renlisa-t-nn Board in 18S5 amounted to £1,839.285, ■after oeditftir^ Mr Foster's auioust. Quo;-i-ig from Assets Realisation Board's balance .rfj-cefc. as the chairman and Mr Watson had Vcid, there had- already b?en. realised to the and o£ March last £825,000. leaving about £1 000,050- to he realised. Of that amount £200,000-con&iisted of sheen and cattle, or oniv £300,000 uasold lands, equal in. amount to what ha* already been sol 1 by the Assets Ttealieatian Board, ccasequentff they expected to pee the remainder completely realised during the next; seven or eight years. It was interesting to- observe that the area- or uasold laJid remaining and vested in the Assets Realisation Board amounts to about 370,000 acres, of which about 262,"b00 acres were improved anxl returned, under the hoard* careful management, over 5£ per cent, on the book values of the estates. One fourth consists of forest and other unimproved land, giving no revenue. Referring ta the Waikato estates, he said it was at first understood that they were of little or no value, but owing to the extension of the dairying industry in thai part of the colony many of these lauds uvero becoming very profitable, and there was reason to believe they would realise very much more than was originally anticipated. Then regarding the colony's guarantee. In the banking legislation of ISSS this guarantee for the bank was a3 follows : Preferred shares in bank. £500,000; Assets Realisation Board debentures issued to tbe bank in ierms of above act. £2,630,285 ; guaranteed stock, £2,000,000; — total, £3,180.285, that security being the whole assets of the Bant of New Zealand, including, of course, the equity of estates taken over by the Assets Realisation Board. They would no doubt dasire to know, and had right to be told, as near as this board could do, the progress made by the bank m the direction of redeeming thac responsibility of the colony and how much of ifc would require lenewal when it fell due in 1901. Re replied that they were aware the • preferred shares were repurchased in October. 1900, amounting to £500,000, and the Assets Realisation Board having already redeemed of their debentures £530,233, it would, it was confidently expected, out of land =alss and profits of the bank (inclusive of £295,000. land sales, and balance of land sales now in their haada) during the ensuing year bring tliis figure up to £1,200,000. As regarded the guaranteed stock, it was certain a reduction of 25 per coat, cc-ild be made, or, sa> , £500,000, a total of £2.200,000, thus reducing the colony's obligation to, say. £3,000,000. one-half of which was secured by estates in the hands of the Assets. Realisation Board. When the <sharee above referred tr> were purchased critics 6aid it was done out of deposits. That had been said by people who certainly ought to know better. T'ley said if it is not paid out of deposit 3 , you had no profits, consequently where did it come from? The answer to that was that the colony paid half a miliiou sovereigns into the bank, and when that was in the bank in addition to (he capital paid up by shareholders there was a total of £950,CG0, bi> that when they purchased the shares th»>y reduced the capital by half a million, \irtuallv banding over a bag of novereigns, and virtually by that process cancelling the share*. By handing . b:ick this half a million they simply reduced the capital of the bank to that exr.ent, and the >u3tification for that was that their right to do it would expire in Decemfear. 1904-. It would be seen by the terms of the Banking Act of 1895, eection 10. that this call was secured to the A-.se U Realisation BoaEd to make good deficiencies on. the realisation of that board's assets. But they would also nee from the foregoing figures that as the deficiencies would to a certainty be made good by the earnings of these estates and the vet profits of the bank ! within a few years-: and. as it was* obviously intended that tlm call should only i be made if it was apparent that the deficiency would not be made up from any other source, tkore- could be no rea»on now for th» Colonial Treasurer to insist upon %\tv call beiuif made for the purpose it was intended. But it might be ?-,ked what would become of this reserve call if uot made before the art expired. As a solu tion of this question, he would susKfit that in the legislation that would probably take place next year tliis reserve liability should he transferred and made payable to the- bank, leaving the time of the making of the call optional with the hank, thus making the capital of the bank £1.000,000 sterling— £500,000 paid up and £500.000 uncalled. Althoutrh paid up, the capital of tUe hank row fell =omewhai short of the sum named. The forfeited shares in the hands of the bank would no doubt scon be told, and the proceed* would make ht> tbe present d»fic:tncy, and they might assume that within a very few years the share* of the bank would be at a premium, in which case the making of this call would be no burden on shareholders', and would be paid most cheerfully. Anyone not able or desiring to pay s-uch a call rould then readily cell their option to takp up the share? at a premium. Aj» the chairman bad informed them, the adoption by this meeting of the report and bfi'ance sheet carried with it the. payment of a. 5 per cent, dividend to shareholders, the fir j t t!>at hud been mode since the bank k-giiluUon in 1894, and for some two years pre-\ ious. He trusted that the statement they had put forward that day would b» regarded ai a sufficient guarantee that they were justified irr rnakiug this dividend in j term 1 ; of ths Banking Act of 1895. '• Mr Beauchamp said he would like to say tl-.it in »oii:e re-pecta Mr Kennedy's remark* nniit be tikeu as of an individual member of tlie bcji.l only. ITi» '.at ' Hunts in regard to th -5 icv.io i .ill and what the amount of i ho i 2w j^-ar.ititeed ssot.it: ot.it li.crild be were of a lustily coniiovefil uarurv It wa« not reeuttble uti judicious iui tli'.iu .ij a- bvfUcl io

make any commitment on those- points, although he recognised Mr Kennedy's right as a shareholder. He did not agree with Mr Kennedy as to the sources from which the money- was obtained ro enable the £500,000 worth of preferred shares to he redeemed. This ?mount had been chiefly obtained from the sale of properties and trading concerns, which were realised vigorously because they were found to be in competition with clients of the bank. He quoted fissures showing the bank'? position in August, 1902, as compared with 1595. Mr Beauchainp went on to say that these fitrures disclosed a state of things which would amp-lv justify rh<m in going to tho Government to ask for a renewal of their guarantee. The Government had done grand service to the colony in keeping such a magnificent institution a« the Bank of New Zealand on it 3 legs. No other bank in Australcia had its earning power, and under good management there was no reason why it should nnf-. he the liggpst dividend-payer in Australasia. — (Applause.)

Mr Kennedy, replying 1 , was afraid Mr Beauclrsmp had not given tho matter pericuis consideration or he would not have said that he (Mr Kenned;,-) was not. in order in his remarks about the redemption of the haif million.

Mr C T. Richardson asked if there was any likeijhood of there being- any further wr'fing off in regard to the assets in tho licujidarion book value.

Tho Chairman said the posit 'on of affairs Ende-r this head had been fully set out in hi« opening remarks. Tke- motion was carried.

Dr Newman proposed votes of thanks on behalf of the shareholders to the chairman, th«» board, and the- officials. Some of th& balance sheets he had looked at had been whited sepulchre* and chambers of honors, but though he- carefully examined this one he had failed to find anything that waa objectionable in it.

Mr John Mills (Dunedin), in seconding the motion, said this was a red-letter day in the history of the bank. He impressed upon shareholders the neesssity of supporting tie ba'ik and thus a-ssisting the directors who had done such splendid work for them and for th& colony.

Tne mot'on was carried with applause,

The Chairman, in responding, said recently they had b*en living in prosperous times, hut it was in times of prosperity that a bnnker had got to keep his head.

Mr Enabling replied on behalf of the ptafF.

Mr Beauchamp moved, and Mr M'Kenzia seconded, a voro of th?nks io the chairman, whic'.i having been carried by acclamation, the meeting- adjourned.